The exchange-rate effect is based, in part, on the idea that
a. a decrease in the price level reduces the interest rate.
b. an increase in the price level causes investors to move some of their funds overseas.
c. an increase in the price level causes domestic goods to become less expensive relative to foreign goods.
d. a decrease in the price level reduces spending on net exports.
a
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If price is greater than average variable cost, a profit maximizing firm will always
A. where Total Revenue is maximized. B. produce where Average Total Cost is minimized. C. produce where Marginal Cost equals Marginal Revenue. D. produce where Marginal Cost is minimized.
An assumption used in the quantity theory of money is that
A) velocity is constant. B) the money supply is constant. C) nominal Gross Domestic Product (GDP) is constant. D) the price level is constant.