With flexible exchange rates
A. The balance of trade is zero.
B. All countries will run either a trade surplus or trade deficit.
C. The equilibrium exchange rate is determined in a foreign exchange market.
D. Foreign exchange reserves are used to offset balance-of-payment deficits.
Answer: C
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The chairman of the Federal Reserve Board of Governors
A) is appointed by the President and confirmed by the Treasury. B) serves a fourteen year term as chairman. C) sits on the Federal Open Market Committee. D) is always the president of the Federal Reserve Bank of New York.
According to Keynesian theory, the profit-maximizing firm demands labor up to the point at which
a. the real wage is equal to the marginal productivity of labor. b. the money wage paid to labor is just equal to the money value of the marginal product of labor. c. labor and capital costs are equal. d. a and/or b are correct.