The reason that supply and demand tend to be more price elastic over longer time periods is because
A) it takes time for households and businesses to adjust to price changes.
B) some goods have longer shelf life and are reordered less often.
C) firms incur costs in changing the price of goods on their shelves.
D) the feedback loop from buyers to sellers takes time.
Question 2 - A necessary condition for exchange rate stability where the sum of the elasticity of import demand and the elasticity of export supply must be greater than one is known as
A) the Marshall Lerner condition.
B) the elasticities rule.
C) the elasticities approach.
D) the exchange rate condition.
Question 3 - The import demand curve determines the ________ in the same way that the export supply curve determines the ________.
A) supply of foreign exchange; demand for foreign exchange
B) supply of domestic currency; demand for domestic currency
C) demand of foreign exchange; supply for foreign exchange
D) demand of domestic currency; supply for domestic currency
Question 4 - Which line in the figure shows a more elastic supply for euros?
A) Line S
B) Line S'
C) There elasticities are the same.
D) This cannot be determined from the graph.
Question 5 - The trade-off between coordinating or not coordinating policies for central banks is measured in terms of
A) inflation and the lowered effectiveness of policies.
B) wage inflation and increased effectiveness of policies.
C) speculative pressure and intra-marginal adjustments.
D) fixed and floating exchange rates.
Question 6 - Coordinating policies when two countries have ________ exchange rates can increase the effect of ________.
A) fixed; inflationary policy bias
B) floating; inflationary policy bias
C) fixed; the locomotive effect
D) floating; beggar-thy-neighbor effect
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