Exploring Macroeconomics 5th Edition Robert L. Sexton - Solutions

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Marketsa. for the most part are efficient.b. provide a way for millions of producers and consumers to allocate scarce resources.c. may not always lead to your desired tastes and preferences.d. All of the above statements are true.
People can gain by specializing in the production of a good in whicha. they have a comparative advantage.b. they have an absolute advantage.c. they have a lower opportunity cost.d. they have a higher opportunity cost.e. both (a) and (c).
Should an attorney who types 100 words per minute hire an administrative assistant to type her legal documents, even though he can only type 50 words per minute? If the attorney does the job, she can do it in five hours; if the administrative assistant does the job, it takes him 10 hours. The
If household water usage was taxed, economists would expecta. people to use less water.b. people to use less water, but they would not reduce their consumption by as much as they would if they were asked to conserve water.c. they would not reduce their water consumption because people need water.d.
Because most people seek opportunities that make people better off,a. it makes it more difficult to predict behavior.b. we can predict what will happen when incentives are changed.c. we cannot predict as well as we could if their behavior was random and chaotic.d. None of the above is true.
The results of which of the following activities would marginal thinking help improve?a. Studyingb. Drivingc. Shoppingd. Looking for a place to park your care. All of the above
Individual gallons of milk at a local grocery store are priced at $4, but two gallons purchased at the same time are priced at $6 for two. The marginal cost of buying a second gallon of milk on a shopping trip isa. $6.b. $4.c. $3.d. $2.e. none of the above.
Why was the opportunity cost of going to college higher for LeBron James (Miami Heat star) than for most undergraduates?
Which of the following are the opportunity costs of going to college?a. Tuitionb. Books needed for classesc. The job I was going to take if I did not go to schoold. All of the above
Which of the following involve an opportunity cost?a. Choosing to go to law school rather than business schoolb. The money I used to pay for my new laptopc. New airline safety regulationsd. All of the above
Money costsa. are not opportunity costs, since they involve money.b. are opportunity costs because you could have used that money to buy other goods and services.c. are always the only relevant opportunity costs.d. both (a) and (c).
To economists, needsa. are difficult to define.b. can be more or less urgent, depending on the circumstances.c. are hard to compare among people.d. ignore scarcity and the fact that choices may change with circumstances and trade-offs.e. all of the above.
Scarce resources includea. labor—the human effort used in producing goods and services.b. land—the natural resources used in the production of goods and services.c. capital—the equipment and structures used to produce goods and services.d. entrepreneurship—the process of combining labor,
The following table gives the prices and quantity demanded of oranges (pounds) for the week of December 10–16.a. Plot the data from the table into a graph.b. Is it a positive or negative relationship? Explain. Price ($/lb.) $0.80 0.70 Quantity Demanded (lbs.) 0 3 0.60 0.50 0.40 457
Do any of the following statements involve fallacies? If so, which ones do they involve?a. Because sitting in the back of classrooms is correlated with getting lower grades in the class, students should always sit closer to the front of the classroom.b. Historically, the stock market rises in years
Suppose the Environmental Protection Agency asks you to help it understand the causes of urban pollution. Air pollution problems are worse the higher the Air Quality Index. You develop the following two hypotheses. Hypothesis I: Air pollution will be a greater problem as the average temperature
Identify which of the following headlines represents a microeconomic topic and which represents a macroeconomic topic.a. “U.S. Unemployment Rate Reaches Historic Highs”b. “General Motors Closes Auto Plant in Wisconsin”c. “OPEC Action Results in a General Increase in Prices”d. “The
In order to isolate the effects of one variable on another, we use the _____________________ assumption.
Actions have _____________________.
Why is the positive/normative distinction important?
Which of the following statements is (are) true?a. Economists disagree but most often over normative issues.b. Economists do agree over a wide range of issues.c. Disagreement is also common in other disciplines.d. All of the above statements are true.
Positive statementsa. are testable.b. are attempts to describe what happens and why it happens.c. do not have to be a true statement.d. All of the above are true.
The fallacy of compositiona. is a problem associated with aggregation.b. assumes that if something is true for an individual, then it is necessarily true for a group of individuals.c. is illustrated in the following statement: If I stand up at a football game, I will be able to see
Why is revealed preference preferred over declared preference?
What do economists mean by self-interest?
Rational self-interest meansa. people never make mistakes.b. that our concerns for others does not involve costs.c. we are materialistic and selfish.d. people make decisions with some desired outcome in mind.
What are the activities of operations management?
What is the input–transformation–output process?
How can the techniques of network planning help project management?
What is project planning and why is it important?
What makes project management successful?
How can the techniques of network planning help project management?
What is project planning and why is it important?
What makes project management successful?
How can queuing theory be used to plan capacity?
How can operations plan and control their capacity level?
What are the alternative ways of coping with demand fluctuation?
How are demand and capacity measured?
What is capacity planning and control?
When should an operation replenish its inventory?
How much inventory should an operation hold?
What are the disadvantages of holding inventory?
Why is inventory necessary?
What is inventory?
What are the types of relationship between operations in supply chains?
What is ERP?
How does one gain an understanding of process technologies?
What is process technology?
What is ‘layout’?
Why should product and service design and process design be considered interactively?
What are the stages in product and service design?
Why is good product and service design important?
What is the difference between a‘top-down’ and a ‘bottom-up’ view of operations strategy?
What are the performance objectives of operations and what are the internal and external benefits which derive from excelling in each of them?
What does top management expect from the operations function?
How does the operations function incorporate all stakeholders’objectives?
Why is operations performance important in any organization?
What will happen to the supply of dollars, the demand for dollars, and the equilibrium exchange rate of the dollar in each of the following cases? a. Americans buy more European goods. b. Europeans invest in U.S. stock market. c. European tourists flock to the United States. d. Europeans buy U.S.
How are each of the following classified, as debits or credits, in the U.S. balance-of-payments accounts? a. Americans buy autos from Japan. b. American tourists travel to Japan. c. Japanese consumers buy rice grown in the United States. d. United States gives foreign aid to Rwanda. e. General
How would each of the following affect the supply of euros, the demand for euros, and the dollar price of euros? Change Reduced U.S. tastes for European goods Increased incomes in the United States Increased U.S. interest rates Decreased inflation in Europe Reduced U.S. tariffs on imports Increased
Assume that a product sells for $100 in the United States.a. If the exchange rate between British pounds and U.S. dollars is $2 per pound, what would the price of the product be in the United Kingdom?b. If the exchange rate between Mexican pesos and U.S. dollars is 125 pesos per dollar, what would
What happens to the supply curve for dollars in the currency market under the following conditions?a. Americans wish to buy more Japanese consumer electronicsb. the United States wishes to prop up the value of the yen
If the demand for a domestic currency decreases in a country using a fixed exchange rate system, what must the central bank do to keep the currency value steady?
How are each of the following events likely to affect the value of the dollar relative to the euro?a. interest rates in the European Union increase relative to the United Statesb. the European Union price level rises relative to the U.S. price levelc. the European central bank intervenes by selling
How are each of the following events likely to affect the U.S. trade balance?a. the European price level increases relative to the U.S. price levelb. the dollar appreciates in value relative to the currencies of its trading partnersc. the U.S. government offers subsidies to firms that export
Indicate whether each of the following represents a credit or debit on the U.S. capital account.a. a French bank purchases $100,000 worth of U.S. Treasury notesb. the central bank in the United States purchases 1 million euros in the currency marketc. a U.S. resident buys stock on the Japanese
Indicate whether each of the following represents a credit or debit on the U.S. current account.a. an American imports a BMW from Germanyb. a Japanese company purchases software from an American companyc. the United States gives $100 million in financial aid to Israeld. a U.S. company in Florida
If the Federal Reserve were to sell U.S. dollars on the foreign exchange market, a likely result would bea. a rightward shift in the dollar supply curve.b. at least a temporary decline in the exchange value of the U.S. dollar.c. at least a temporary increase in the exchange value of the U.S.
If real interest rates in the United States rose and real interest rates in England fell, we would expect people toa. increase their demand for British pounds.b. borrow more from U.S. sources.c. buy relatively more U.S. assets.d. buy relatively more British assets.e. do both b and c.
As the number of British pounds that exchange for a dollar falls on foreign currency markets,a. the British will have an incentive to import fewer U.S. goods.b. the British will find it easier to export goods to the United States.c. the British will find U.S. goods to be more expensive in their
If the dollar depreciates relative to the yen, we would expecta. that the Japanese trade surplus with the United States would increase.b. that Japanese imports from the United States would decrease.c. that Japanese exports to the United States would decrease.d. that a and b would occur.
A country will tend to experience currency depreciation relative to that of other countries ifa. the profitability of investments in other countries increases relative to the profitability in that country.b. people in the foreign currency markets expect the value of the currency to fall in the near
Sweden’s currency will tend to appreciate ifa. the demand for Sweden’s exports increases.b. the demand for imports by Swedes increases.c. real interest rates in Sweden decrease relative to those of the rest of the world.d. Sweden’s inflation rate rises relative to inflation in the rest of the
If real interest rates in the United States fell relative to real interest rates in other countries, other things being equal,a. the exchange value of the dollar would decline relative to other currencies.b. the exchange value of the dollar would increase relative to other currencies.c. the
If real incomes in foreign nations were growing more rapidly than U.S. real incomes, one would expect that, as a result,a. the exchange value of the dollar would decline relative to other currencies.b. the exchange value of the dollar would increase relative to other currencies.c. the exchange
If the rate of inflation in the United States falls relative to the rate of inflation in foreign nations, U.S. net exports will tend to ___________, causing the exchange value of the U.S. dollar to ___________.a. rise; riseb. rise; fallc. fall; rised. fall; fall
If the demand by foreigners for U.S. government securities increased, other things being equal, it would tend toa. increase the exchange value of the dollar and increase U.S. merchandise exports.b. increase the exchange value of the dollar and decrease U.S. merchandise exports.c. decrease the
In foreign exchange markets, the effect of an increase in the demand for dollars on the value of the dollar is the same as that ofa. an increase in the supply of foreign currencies.b. a decrease in the supply of foreign currencies.c. a decrease in the demand for dollars.d. none of the above.
In foreign exchange markets, the supply of dollars is determineda. by the level of U.S. imports and the demand for foreign assets by U.S. citizens and the U.S. government.b. solely by the level of U.S. merchandise exports.c. solely by the level of U.S. merchandise imports.d. solely by the levels of
If a dollar is cheaper in terms of a foreign currency than the equilibrium exchange rate, a ___________ exists at the current exchange rate that will put ___________ pressure on the exchange value of a dollar.a. surplus of dollars; downwardb. surplus of dollars; upwardc. shortage of dollars;
Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar. If the exchange rate goes to 10 pesos per dollar, it would tend toa. increase U.S. exports to Mexico.b. decrease U.S. exports to Mexico.c. increase Mexican exports to the United States.d. decrease Mexican
If the exchange rate between euros and dollars were 2 euros per dollar, when an American purchased a good valued at 80 euros, its cost in dollars would bea. $160.b. $80.c. $40.d. none of the above.
A depreciation in the U.S. dollar woulda. discourage foreigners from making investments in the United States.b. discourage foreign consumers from buying U.S. goods.c. reduce the number of dollars it would take to buy a Swiss franc.d. encourage foreigners to buy more U.S. goods.
Other things being constant, which of the following will most likely cause the dollar to appreciate on the exchange rate market?a. higher domestic interest ratesb. higher interest rates abroadc. expansionary domestic monetary policyd. reduced inflation abroad
Suppose that the dollar rises from 100 to 125 yen. As a result,a. exports to Japan will likely increase.b. Japanese tourists will be more likely to visit the United States.c. U.S. businesses will be less likely to use Japanese shipping lines to transport their products.d. U.S. consumers will be
If fewer British tourists visit the Grand Canyon, what is the effect in the exchange market?a. It will increase the supply of British pounds.b. It will decrease the supply of British pounds.c. It will increase the demand for British pounds.d. It will decrease the demand for British pounds.
If the United States experiences a sharp increase in exports, what will happen to demand for the U.S. dollar?a. It will decrease.b. It will increase.c. It will be unchanged.d. It will change at the same rate as the supply of dollars will change.e. There is not enough information to make a
If the dollar appreciates relative to other currencies, which of the following is true?a. It takes more of the other currency to buy a dollar.b. It takes less of the other currency to buy a dollar.c. No change occurs in the currency needed to buy a dollar.d. Not enough information is available to
Which of the following is most likely to favor the appreciation of the American dollar?a. a German professor on vacation in Iowab. an American professor on extended vacation in Parisc. an American farmer who relies on exportsd. Disney World
If the price in dollars of Mexican pesos changes from $0.10 per peso to $0.14 per peso, the peso hasa. appreciated.b. depreciated.c. devalued.d. stayed at the same exchange rate.
If the exchange rate between the dollar and the euro changes from $1 1 euro to $2 1 euro, thena. European goods will become less expensive for Americans, and imports of European goods to the United States will rise.b. European goods will become less expensive for Americans, and imports of
On May 16, 1999, it cost $0.667 to buy one Canadian dollar. How many Canadian dollars would $1 U.S. buy?a. $1.50b. $1.30c. $1.00d. $0.67
If the dollar depreciates, it can be said thata. foreign countries no longer respect the United States.b. other currencies appreciate.c. it falls in value just as it does during inflation.d. it takes fewer dollars to buy units of other currencies.e. all of the above are correct.
If high-yield investment opportunities attract capital from abroad and lead to a capital account surplus, then thea. nation’s currency must appreciate.b. nation’s currency must depreciate.c. nation must run a current account deficit under a flexible exchange rate system.d. nation must run a
Under a system of flexible exchange rates, a deficit in a country’s balance of payments will be corrected bya. depreciation in the nation’s currency.b. appreciation in the nation’s currency.c. a decline in the nation’s domestic price level.d. an increase in the nation’s inflation rate.
Suppose the United States imposed a high tariff on a major imported item. Under a system of flexible rates of exchange, this tariff would tend toa. cause the dollar to appreciate in value.b. cause the dollar to depreciate in value.c. increase the U.S. balance-of-trade deficit.d. increase the U.S.
The balance-of-payments accounts for and records information abouta. purchases of U.S. financial assets by foreigners.b. purchases of foreign financial assets by Americans.c. the levels of imports and exports of goods and services for a country.d. all of the above.
When goods or services cross international borders,a. money must generally move in the opposite direction.b. payment must be made in another good, using barter.c. a future shipment must be made to offset the current sale/purchase.d. countries must ship gold to make payment.
If the value of a nation’s merchandise exports exceeds merchandise imports, then the nation is running aa. balance-of-payments deficit.b. balance-of-payments surplus.c. merchandise trade deficit.d. merchandise trade surplus.
Which of the following will enter as a credit in the U.S. balance-of-payments capital account?a. the purchase of a Japanese automobile by a U.S. consumerb. the sale of Japanese electronics to an Americanc. the sale of an American baseball team to a Japanese industrialistd. the purchase of a

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