What assumptions are made to create a model to determine short-run changes in exchange rates using the asset approach?
a. Prices are completely flexible.
b. In the long run, money is neutral.
c. Prices are sticky, yet nominal interest rates are flexible.
d. Prices and nominal interest rates are sticky.
Ans: c. Prices are sticky, yet nominal interest rates are flexible.
Economics
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A tax on cigarettes:
A. increases total surplus. B. increases efficiency in the market. C. will increase both total surplus and efficiency in the market. D. like any tax, will always reduce surplus and efficiency in markets.
Economics
Under the principle of comparative advantage total output is greatest when each product is made by the country that
A. enjoys an absolute advantage. B. has the lowest opportunity cost. C. has the lowest wage rates. D. has the lowest degree of specialization.
Economics