A proposed steel mill will be powered by coal. The country has one company that mines a limited amount of inferior coal, which may not be suitable. In evaluating the potential profit of this mill, how should we determine the price of coal?
What will be an ideal response?
Students should understand that the local price of coal is affected not only by its inferior quality but also by the limited, monopolistic market. A shadow price should be used, probably derived from the price of importing suitable coal.
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Special drawing rights (SDRs) are
A) a reserve asset created by the International Monetary Fund that countries can use to settle international payment obligations. B) a liability payment from a branch bank to a nation's central bank. C) a country's surpluses in their fiscal budgets. D) exchanges of gold between nations.
If you put $500 into a checking account, the immediate effect (do not consider the money multiplier which we will study in the next chapter) is:
a. M1 rises, M2 falls, and the monetary base remains the same. b. M1 falls, M2 falls, and the monetary base remains the same. c. M1 rises, M2 rises, and the monetary base remains the same. d. M1, M2, and the monetary base rise. e. M1, M2, and the monetary base remain the same.