Draw a scatter diagram of the inflation rate and the interest rate. Describe the relationship
What will be an ideal response?
To make a scatter diagram of the inflation rate and the interest rate, plot the inflation rate on the x-axis and the interest rate on the y-axis. The graph will be a set of dots and is shown in Figure A1.4 . The pattern made by the dots tells us that as the inflation rate increases, the interest rate usually increases so there is a (weak) positive relationship.
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As long as it does not shut down, a profit-maximizing perfectly competitive firm will
A) always earn an economic profit. B) produce so that marginal revenue equals marginal cost. C) produce so that price equals average cost. D) never set its price equal to its marginal revenue.
What was the result of the Bretton Woods Conference?
(A) The creation of a fixed exchange-rate system for the United States and much of Western Europe. (B) The creation of NAFTA. (C) The creation of a flexible exchange-rate system for the United States and much of Western Europe. (D) The creation of the euro.