In determining the exchange rate between the Canadian dollar and British pound, if Canadian income increases, then
a. the Canadian demand for pounds increases
b. the price of pounds decreases
c. the Canadian demand for pounds decreases
d. the Canadian supply of pounds increases
e. the supply of Canadian dollars decreases
QUESTION 2Suppose that you can either buy a radio from a firm for 50 or find and purchase the components yourself and then either assemble them yourself or hire someone to do so. You should
a. buy the radio because it's possible to do so
b. assemble the radio yourself because it's possible to do so
c. assemble the radio yourself only if you know how to do so
d. assemble the radio yourself only if the total price of all the components is less than 50
e. assemble the radio yourself only if the total price of all the components plus the value of your own time is less than 50
QUESTION 3In determining the exchange rate between the Canadian dollar and British pound, if Canadian income increases, then
a. the demand for pounds will increase, leading to depreciation of the Canadian dollar, assuming exchange rates are allowed to float
b. the demand for pounds will increase, leading to depreciation of the Canadian dollar, assuming exchange rates are fixed
c. the demand for pounds will increase, leading to appreciation of the Canadian dollar, assuming exchange rates are allowed to float
d. the demand for pounds will increase, leading to appreciation of the Canadian dollar, assuming exchange rates are fixed
e. the supply of pounds will shift to the left, causing appreciation of the Canadian dollar, assuming exchange rates are fixed
QUESTION 4If the production of a sofa requires the purchase of 3 types of inputs and the production of a harp requires the purchase of 30 types of inputs,
a. the harp-producing firm will buy the sofa-producing firm
b. the sofa-producing firm will buy the harp-producing firm
c. harp production is more likely to be done by firms than sofa production is
d. sofa production is more likely to be done by firms than harp production is
e. both harp and sofa production will always be done by firms because there is more than one input involved in each
QUESTION 5Which of the following is true?
a. If the Australian dollar depreciates, the Australian trade deficit decreases, since Australian products become cheaper to foreigners.
b. If the Australian dollar depreciates, the Australian trade deficit decreases, since Australian products become more expensive to foreigners.
c. If the Australian dollar depreciates, the Australian trade deficit increases, since Australian products become more expensive to foreigners.
d. If the Australian dollar appreciates, the Australian trade deficit decreases, since Australian products become cheaper to foreigners.
e. If the Australian dollar appreciates, the Australian trade deficit decreases, since Australian products become more expensive to foreigners.
QUESTION 6Ronald Coase's study, The Nature of the Firm, argued that firms are formed to take advantage of situations in which hierarchies are more efficient than markets.
a. True
b. False
QUESTION 7If the Irish pound declines in value against other major currencies, which of the following happens?
a. The Irish trade deficit will increase.
b. The Irish trade deficit will be unaffected.
c. The Irish trade deficit will decrease.
d. Irish products will become more expensive to foreigners.
e. Foreign goods will become cheaper in Ireland.
QUESTION 8Firms emerge when transaction costs of using the market are less than the cost of hierarchical control.
a. True
b. False
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