Question # 1

Under floating exchange rates, expectations of higher interest rates are likely to cause an __________ of the exchange rate.

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Depreciation

Appreciation

fall

Devaluation

The main cause of different relative costs between countries are.

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Relative factors competition

Relative factor mobility

Relative factor substitution

Relative factor endowments

A dominant strategy is.

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A winning strategy

A losing strategy

A players best strategy when moving fist

a player's best strategy whatever the strategies adopted by rivals

The increase in total cost when one more units is produced is known as.

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Marginal cost

Opportunity cost

Limited cost

Average cost

The cost of using capital services is the

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wage rate of capital

Interest charges

Marginal capital cost

Rental rate for capital

A reduction in interest rates, causes an increases in the monetary base that result in an_____ in the availability of consumer credit and a _ in the cost of consumer credit.

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Reduction, increases

reduction,reduction

increase, reduction

increases, increases

If a price increase of good A increases the quantity demanded of good B, then good B is a.

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substitute good

Complementary good

Bargain

Interior good

Firms are assumed to ____ costs and to _______ profit.

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Incur , desire

Pay ; make

Change ;earn

Minimize ; maximize

International difference in opportunity costs lead to countries acquiring.

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Comparative advantage

High exchange rates

Trade exchange rates

Trade barriers

The theory that explains business cycles by the dynamic interaction of consumption and investment demand is the.

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Sun spect theory

Multiplier accelerator model

Solow theory

New classical theory

The price elasticity of demand measures

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The responsiveness of quantity demanded to a change in prie.

How far a demand curve shifts

A change in price

A change in quantity demanded

In the economy when a steel producer sells steel to car producer it is regarded as.

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A final good

An intermediate good

an injection

a leakage

The growth rate of economics tend to converge because._________ is easier when capital per worker is low and because of_____

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capital widening, technical innovation

Capital widening, catch up in technology

Capital deepening, technical innovation

Capital deepening, catch up technology.

In the classical model, potential output can not be increased by

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Monetary growth

Better technology

More capital

higher labour supply

LDC's often have a comparative advantage in the production of.

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Primary products

Intermediate products

Manufactured products

Financial services.

An allocation is Pareto efficient if no reallocation of resources would make some people_______ whiteout making others

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Worse off, worse off

better off, better off

better off, worse off

equal , unequal

If the central bank buys financial securities in the open market to increase the monetary base, this is an example of.

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Lender of last resort

Financial intermediation

Open market operations

Financial regulation.

Taxes create a wedge between the sales price and purchase price that prevents the price system equaling _________ and

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Marginal costs, marginal benefits

Demand, supply

Marginal cost, marginal revenue

Marginal cost, average cost

The prisoners Dilemma Game demonstrates that.

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Players are better off to act independently

Monopoly is better than competition

People will always cheat

Players are better off if they con operate

The short run Philips curve can shift in response to changes in

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inflationary expectations

Unemployment

The inflation rate

Wage rates

If the MPC is 0.5 the multiplier is

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2

1/2

0.2

20

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