Under a gold standard,
a. a nation's currency can be traded for gold at a fixed rate
b. a nation's central bank or monetary authority has absolute control over its money supply
c. new discoveries of gold have no effect on money supply or prices
d. prices are constant (there is no inflation and no deflation)
e. all international transactions are financed with gold
QUESTION 2Which of the following would not limit the extent of a firm's vertical integration?
a. the managers' bounded rationality
b. a large minimum efficient scale of producing inputs relative to the firm's input requirements
c. the fact that the quality of inputs is easily determined at the time of purchase
d. many interchangeable suppliers of the firm's inputs
e. high transaction costs of contracting with resource suppliers
QUESTION 3The international financial system operated under a gold standard
a. from the 1500s through the present
b. from 1879 through the present
c. from 1879 to 1914
d. from 1914 to 1939
e. never
QUESTION 4Apple Computer is more likely to continue to use input markets rather than manufacture its own inputs internally when
a. the quality of inputs is difficult to determine
b. switching among input suppliers is easy
c. there are very few firms producing the input
d. the input is difficult to identify and define
e. transaction costs go up
QUESTION 5One feature of the gold standard was that
a. countries had almost complete control over their own monetary policies
b. surplus could cause the money supply to decrease
c. slow gold production could lead to deflation
d. exchange rates were unstable
e. each currency was worth the same as other currencies
QUESTION 6Suppose there is only one producer of frames, a necessary component in manufacturing computer monitors. Because of the threat of entry, this firm charges its customers a price equal to average cost. One reason that a producer of computer monitors may make rather than buy frames is
a. the frame supplier may be unreliable
b. the total cost of the components of frames is the same as the price of frames purchased in the market
c. the frame manufacturer has no incentive to make high-quality frames
d. managers at the computer monitor firm place a high value on their time
e. the frame manufacturer will soon go out of business because firms do not produce goods for the market that can be made in-house
QUESTION 7Under the gold standard, all except one of the following are true. Which is not true?
a. Paper currency was convertible into gold at a fixed rate.
b. A balance-of-payments deficit would result in a loss of gold.
c. A balance-of-payments surplus would result in an inflow in gold.
d. The money supply of any country was largely determined by flows of gold.
e. A surplus country experienced a rise in its money supply and a drop in its price level.
QUESTION 8One reason a computer manufacturer may make its own microchips rather than buy them is that
a. it can maintain control over the quality during production
b. the total cost of components is the same as the price of chips purchased from a chip manufacturer
c. firms do not make high-quality microchips
d. managers at the computer firm place a high value on their time
e. firms do not produce goods for the market that can be made in-house