In the United States, where there is a permanent increase in the money supply, exchange rate overshooting is caused in part by:
a. higher domestic interest rates.
b. an appreciation of the dollar.
c. lower foreign interest rates.
d. a depreciation of the dollar.
Ans: d. a depreciation of the dollar.
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The indifference curves in the figure above (I1, I2, and I3 ) reflect Peter's consumption preferences. Peter prefers consuming ________ to consuming ________
A) 48 slices of pizza and 12 chocolate bars; 24 slices of pizza and 24 chocolate bars B) 40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars C) 24 slices of pizza and 24 chocolate bars; 40 slices of pizza and 20 chocolate bars D) 32 slices of pizza and 8 chocolate bars; 16 slices of pizza and 16 chocolate bars
Suppose that in an hour you can either make 20 tortillas or word-process 5 pages of text, while in an hour your roommate can either make 15 tortillas or word-process 15 pages of text. Which of the following is correct?
a. Your comparative advantage is in making tortillas. b. Your roommate's comparative advantage is making tortillas. c. Your roommate has an absolute advantage in both tasks. d. You have an absolute advantage in both tasks.