A firm is currently operating where the MC of the last unit produced = $84, and the MR of this unit = $70. What would you advise this firm to do?
A. Shut down.
B. Increase output.
C. Stay at its current output.
D. Decrease output.
Answer: D
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Suppose at present people hold a quantity of money equal to 85% of nominal GDP. What happens to velocity if people wish to increase their money holdings to 80% of nominal GDP?
A) Velocity can increase or decrease depending on people's tastes and preferences toward money. B) Velocity is unaffected. C) Velocity increases. D) Velocity decreases.
One of the distinguishing characteristics of capital mobility today is that
A) there are far more kinds of financial instruments than there were 100 years ago. B) nations are no longer dependent on their own national savings for their investment funds. C) the bulk of foreign capital flows are tied to labor flows. D) foreign capital flows are better managed and rarely cause financial problems. E) currency markets play a less significant role than they did in the past.