How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.)
A) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined.
B) The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined.
C) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase.
D) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase.
Answer: A
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The above figure shows the payoff to two firms in an industry deciding to make an investment in worker safety. The dominant strategy for each firm
A) is to do the opposite of the other firm. B) is to make the investment. C) is to not make the investment. D) does not exist.
If the aggregate supply curve is steep,
a. increased aggregate demand will not lead to higher prices. b. greater demand for labor will not cause significant wage increases. c. business firms are probably producing near capacity. d. All of the above are correct.