Salvatore Principles of Economics (Chapter 15-23) Useful Book

Salvatore Principles of Economics

The book “Theory and Problems of Principles of Economics” is also known as Salvatore Principles of Economics. The authors of this book are as under:-

  • Dominick Salvatore, Ph.D., Professor of Economics, Fordham University
  • Eugene A. Diulio, Ph.D., Associate Professor of Economics, Fordham University

Each chapter of “Salvatore Principles of Economics ” includes the following main headings:-

  • Chapter Summary
  • Important Terms
  • Outline of Cahpter (with examples)
  • Solved Problems
  • Multiple Choice Questions
  • True or False Questions
  • Answers of MCQs and True or False Questions
Salvatore Principles of Economics
Salvatore Principles of Economics

Chapter-Wise Solved MCQs ~ Salvatore Principles of Economics

You can explore the Solved MCQs of following Chapter 1 to Chapter 14 of Salvatore Principles of Economics as under:-

Solved MCQs of the following chapters of “Schaum Outline Principles of Economics” are as follow:-

  • Chapter 15: The Theory of Consumer Demand and Utility
  • Chapter 16: Costs of Production
  • Chapter 17: Price and Output: Perfect Competition
  • Chapter 18: Price and Output: Monopoly
  • Chapter 19: Price and Output: Monopolistic Competition and Oligopoly
  • Chapter 20: Production and the Demand for Economic Resources
  • Chapter 21: Wage Determination
  • Chapter 22: Rent, Interest, and Profits
  • Chapter 23: International Trade and Finance

Chapter 15: Theory of Consumer Demand & Utility (Solved MCQs)

  • The law of downward-sloping demand can be explained in terms of
    • the substitution effect
    • the income effect
    • both the substitution and income effects
    • neither the substitution nor income effect
  • A complementary explanation of the downsloping demand curve is given by
    • diminishing returns
    • diminishing marginal utility
    • decreasing costs
    • decreasing returns to scale
  • When total utility increases, marginal utility is
    • negative and increasing
    • negative and declining
    • zero
    • positive and declining
  • Consumer’s surplus is defined as
    • the difference between what the consumer actually pays and what he is willing to pay
    • the difference between what the consumer is willing to pay and what he actually pays
    • the sum of what the consumer pays and what he is willing to pay
    • what the consumer is willing to pay divided by what he actually pays
Demand Salvatore Principles of Economics
Demand (Salvatore Principles of Economics)
0

Chapter 15: The Theory of Consumer Demand and Utility

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 4

The law of downward-sloping demand can be explained in terms of

2 / 4

A complementary explanation of the down-sloping demand curve is given by

3 / 4

When total utility increases, marginal utility is

4 / 4

Consumer’s surplus is defined as

Chapter 16: Costs of Production (Solved MCQs)

  • The interest paid by a firm to borrow money capital represents an
    • explicit cost
    • implicit cost
    • opportunity cost
    • all of the above
  • The wage that an entrepreneur would earn if he or she worked instead as a manager for someone else in his or her best alternative employment represents a(n)
    • profit
    • explicit cost
    • implicit cost
    • opportunity cost
  • The law of diminishing returns is a
    • monetary relationship between inputs and output
    • short-run law
    • long-run law
    • questionable production relationship
  • The law of diminishing returns begins to operate when the
    • total product begins to rise
    • total product begins to fall
    • marginal product begins to rise
    • marginal product begins to fall
  • If only part of the labor force employed by a firm can be dismissed at any time and without pay, the total wages and salaries paid out by the firm must be considered
    • a fixed cost
    • a variable cost
    • partly a fixed and partly a variable cost
    • any of the above
  • When the law of diminishing returns begins to operate, the TVC curve begins to
    • fall at an increasing rate
    • rise at a decreasing rate
    • fall at a decreasing rate
    • rise at an increasing rate
  • All of the following cost curves are U-shaped except the
    • AVC curve
    • AFC curve
    • AC curve
    • MC curve
  • AFC equals the vertical distance between the
    • AC curve and the AVC curve
    • AC curve and the MC curve
    • AVC curve and the MC curve
    • all of the above
  • The MC schedule is obtained by subtracting successive values of
    • TC
    • TVC
    • either TC or TVC
    • none of the above
  • The LAC curve shows the
    • minimum cost of producing various levels of output within a particular plant
    • minimum cost of producing various levels of output when plant size can be varied
    • profit-maximizing level of output
    • change in TC of producing various levels of output when all inputs can be varied
  • A firm’s declining LAC curve over some ranges of output can be explained by
    • diminishing returns
    • decreasing returns to scale
    • increasing returns to scale
    • increasing costs
  • If a firm doubles all inputs in the long run and total output less than doubles, we have a case of
    • diminishing returns
    • constant returns to scale
    • increasing returns to scale
    • decreasing returns to scale
0

Chapter 16: Costs of Production

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 12

The interest paid by a firm to borrow money capital represents an

2 / 12

The wage that an entrepreneur would earn if he or she worked instead as a manager for someone else in his or her best alternative employment represents a(n)

3 / 12

The law of diminishing returns is a

4 / 12

The law of diminishing returns begins to operate when the

5 / 12

If only part of the labor force employed by a firm can be dismissed at any time and without pay, the total wages and salaries paid out by the firm must be considered

6 / 12

When the law of diminishing returns begins to operate, the TVC curve begins to

7 / 12

All of the following cost curves are U-shaped except the

8 / 12

AFC equals the vertical distance between the

9 / 12

The MC schedule is obtained by subtracting successive values of

10 / 12

The LAC curve shows the

11 / 12

A firm’s declining LAC curve over some ranges of output can be explained by

12 / 12

If a firm doubles all inputs in the long run and total output less than doubles, we have a case of

Chapter 17: Price & Output: Perfect Competition (Solved MCQs)

  • In perfect competition,
    • there are a large number of independent sellers, each too small to affect the commodity price
    • the product of all firms is homogeneous or identical
    • firms can easily enter or leave the industry
    • all of the above
  • A firm maximizes its total profits when
    • TR = TC
    • TC exceeds TR by the greatest amount
    • TR exceeds TC by the greatest amount
    • it is at the break-even point
  • The demand curve faced by a perfectly competitive firm is
    • negatively sloped
    • positively sloped
    • horizontal
    • any of the above
  • MR for the perfectly competitive firm
    • is equal to the change in TR per unit change in the quantity sold
    • equals P
    • is constant
    • all of the above
  • In the marginal approach, the best level of output for a perfectly competitive firm is the output at which
    • MR or P — rising MC
    • MR or P = falling MC
    • AC is lowest
    • AVC is lowest
  • If at the output at which MC or P — rising MC, P = AC, the firm is
    • making a profit
    • breaking even
    • minimizing losses
    • at its shutdown point
  • If at the best level of output, P is smaller than AC but higher than AVC, the firm
    • shuts down
    • breaks even
    • minimizes total losses
    • maximizes total profits
  • If at the best level of output, P is smaller than AC but higher than AVC, the firm
    • incurs total losses greater than its TFC
    • incurs total losses equal to its TFC
    • incurs total losses smaller than its TFC
    • makes a profit
  • The shutdown point for the firm is the output of lowest
    • AC
    • AVC
    • MC
    • P
  • The competitive firm’s short-run supply curve is the rising portion of the
    • MC curve above AVC
    • MC curve above AC
    • AC curve above AVC
    • AVC curve above MC
  • A perfectly competitive firm in long-run equilibrium produces the output at which
    • P = lowest SAC
    • P = lowest LAC
    • P = SMC
    • all of the above
  • If factor prices rise as industry output expands in the long run, we have
    • a constant-cost industry
    • a decreasing-cost industry
    • an increasing-cost industry
    • any of the above
Perfect Competition Salvatore Principles of Economics
Perfect Competition (Salvatore Principles of Economics)
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Chapter 17: Price and Output: Perfect Competition

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 12

In perfect competition,

2 / 12

A firm maximizes its total profits when

3 / 12

The demand curve faced by a perfectly competitive firm is

4 / 12

MR for the perfectly competitive firm

5 / 12

In the marginal approach, the best level of output for a perfectly competitive firm is the output at which

6 / 12

If at the output at which MC or P — rising MC, P = AC, the firm is

7 / 12

If at the best level of output, P is smaller than AC but higher than AVC, the firm

8 / 12

If at the best level of output, P is smaller than AC but higher than AVC, the firm

9 / 12

The shutdown point for the firm is the output of lowest

10 / 12

The competitive firm’s short-run supply curve is the rising portion of the

11 / 12

A perfectly competitive firm in long-run equilibrium produces the output at which

12 / 12

If factor prices rise as industry output expands in the long run, we have

Chapter 18: Price and Output: Monopoly

  • In pure monopoly,
    • there is a single seller of a commodity for which there are no close substitutes
    • there is a single seller of a commodity for which there are close substitutes
    • there are few sellers of a commodity for which there are no close substitutes
    • firms can enter or leave the industry in the long run without much difficulty
  • Pure monopoly may be based on
    • increasing returns to scale
    • control over the supply of raw materials
    • patent or government franchise
    • all of the above
  • The demand curve facing the pure monopolist is
    • negatively sloped
    • horizontal
    • positively sloped
    • any of the above are possible
  • The MR of the monopolist is
    • larger than P
    • equal to P
    • smaller than P
    • any of the above is possible
  • The best level of output for the monopolist is the output at which
    • MR equals AC
    • MR equals MC
    • MR exceeds MC
    • MR is less than MC
  • In the short run, the monopolist
    • makes a profit
    • breaks even
    • incurs a loss
    • any of the above is possible
  • The short-run supply curve of the monopolist is
    • the rising portion of the MC curve
    • the rising portion of the MC curve above AVC
    • the rising portion of the MC curve above AC
    • none of the above
  • In the long run, the monopolist
    • can incur losses
    • breaks even because other firms enter the industry and compete away profits
    • can continue to make profits because entry into the industry is blocked or restricted
    • always produces at the lowest point on the LAC curve
  • Price discrimination involves charging different prices for a commodity
    • for different quantities purchased
    • to different classes of customers
    • in different markets
    • all of the above
  • With respect to a perfectly competitive industry with identical cost conditions, a monopolist
    • produces a larger quantity
    • produces a smaller quantity
    • charges the same price
    • charges a lower price
  • Government can eliminate all monopoly profits by setting a price equal to
    • AC
    • AVC
    • AFC
    • MC
  • A regulated monopolist would not misallocate resources only if the government regulatory agency set the price equal to
    • AC
    • AVC
    • AFC
    • MC
0

Chapter 18: Price and Output: Monopoly

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 12

In pure monopoly,

2 / 12

Pure monopoly may be based on

3 / 12

The demand curve facing the pure monopolist is

4 / 12

The MR of the monopolist is

5 / 12

The best level of output for the monopolist is the output at which

6 / 12

In the short run, the monopolist

7 / 12

The short-run supply curve of the monopolist is

8 / 12

In the long run, the monopolist

9 / 12

Price discrimination involves charging different prices for a commodity

10 / 12

With respect to a perfectly competitive industry with identical cost conditions, a monopolist

11 / 12

Government can eliminate all monopoly profits by setting a price equal to

12 / 12

A regulated monopolist would not misallocate resources only if the government regulatory agency set the price equal to

Chapter 19: Price & Output: Monopolistic Competition & Oligopoly

  • Monopolistic competition refers to the form of market organization in which there are
    • many sellers of a homogeneous product
    • many sellers of a differentiated product
    • few sellers of a homogeneous product
    • few sellers of a differentiated product
  • The demand curve facing the monopolistic competitor is
    • negatively sloped and highly elastic
    • negatively sloped and highly inelastic
    • horizontal
    • infinitely elastic
  • The best level of output for the monopolistic competitor is the output at which
    • MR equals AC
    • MR equals MC
    • MR exceeds MC
    • MR is less than MC
  • In the short run, the monopolistic competitor
    • breaks even
    • makes a profit
    • incurs a loss
    • any of the above is possible
  • In the long run, a monopolistic competitor
    • incurs a loss
    • breaks even
    • makes a profit
    • any of the above is possible
  • A monopolistic competitor, in the long run,
    • produces where P exceeds MC
    • does not produce at the lowest point on its AC curve
    • engages in nonprice competition
    • all of the above
  • Which of the following most closely approximates an oligopoly?
    • The cigarette industry
    • The barbershops in a city
    • The gasoline stations in a city
    • Wheat farmers in the Midwest
  • The short-run supply curve of the oligopolist is
    • the rising portion of the MC curve
    • the rising portion of the MC curve above AVC
    • the rising portion of the MC curve above AC
    • none of the above
  • The kinked demand curve is used to rationalize
    • collusion
    • price competition
    • price rigidity
    • price leadership
  • Price leadership is
    • a form of overt collusion
    • a form of tacit collusion
    • illegal in the United States
    • used to explain price rigidity
  • If an oligopolist incurs losses in the short run, then in the long run,
    • it will go out of business
    • it will stay in business
    • it will break even
    • any of the above is possible
  • The oligopolist
    • produces where P exceeds MC
    • usually produces at the lowest point on the AC curve
    • breaks even in the long run
    • does not engage in non-price competition
0

Chapter 19: Price and Output: Monopolistic Competition and Oligopoly

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 12

Monopolistic competition refers to the form of market organization in which there are

2 / 12

The demand curve facing the monopolistic competitor is

3 / 12

The best level of output for the monopolistic competitor is the output at which

4 / 12

In the short run, the monopolistic competitor

5 / 12

In the long run, a monopolistic competitor

6 / 12

A monopolistic competitor, in the long run,

7 / 12

Which of the following most closely approximates an oligopoly?

8 / 12

The short-run supply curve of the oligopolist is

9 / 12

The kinked demand curve is used to rationalize

10 / 12

Price leadership is

11 / 12

If an oligopolist incurs losses in the short run, then in the long run,

12 / 12

The oligopolist

Chapter 20: Production & the Demand for Economic Resources

  • Wages, rents, interests, and profits are a major determinant of
    • the money incomes of resource owners
    • the relative shares of national income going to various kinds of resource owners
    • how resources are allocated to various uses and firms
    • all of the above
  • Which of the following statements is incorrect?
    • satisfaction they get from them Consumers demand final commodities because of the utility
    • Firms demand resources in order to produce goods and services demanded by consumers
    • Firms demand resources because of the utility or satisfaction they get from them
    • The more productive a resource in producing a commodity, the greater the resource price
  • The extra product generated by adding one unit of a resource to the other fixed resources is called
    • marginal physical product (MPP)
    • marginal revenue product (MRP)
    • marginal resource cost (MRC)
    • marginal revenue (MR)
  • When the firm is a perfect competitor in the product market, its MRP declines because of declining
    • MPP only
    • commodity price only
    • marginal revenue only
    • MPP and the commodity price
  • Which of the following statements is incorrect?
    • The increase in the firm’s total costs in hiring one more unit of the variable resource is called the marginal resource cost (MRC)
    • When the firm is a perfect competitor in the resource market, the marginal resource cost equals the resource price
    • Total revenue equals product price times MPP
    • To maximize total profits, a firm should hire the variable resource until MRP = MRC
  • When the firm is a perfect competitor in the resource market, its demand for the variable resource is the schedule of
    • MRP
    • MPP
    • MRC
    • MR
  • When the firm is an imperfect competitor in the product market, its MRP declines because of declining
    • MPP only
    • commodity price only
    • marginal revenue only
    • MPP and commodity price
  • When the firm is an imperfect competitor rather than a perfect competitor in the product market, its demand for the variable resource (other things being equal) is
    • more elastic
    • less elastic
    • infinitely elastic
    • unitary elastic
  • A firm’s demand for a productive resource increases (i.e., shifts up) when
    • the product demand increases
    • the productivity of the resource rises
    • the prices of substitute resources rise or the prices of complementary resources fall
    • all of the above
  • Which of the following is incorrect? A firm’s demand for a resource is more elastic
    • the more elastic the product demand
    • the greater the rate of decline of the resource’s MPP
    • the easier it is to substitute this for other resources in production when the price of the resource falls
    • the larger the proportion of the resource’s cost to total production costs
  • When a perfectly competitive firm in the labor and capital markets is maximizing its total profits
    • MRPL = PL
    • MRPK = PK
    • MRPLPL = MRPK/PK = 1
    • all of the above
  • When an imperfectly competitive firm in the labor and capital markets is maximizing profits
    • MRPLPL = MRPK/PK = PK
    • MRPLPL = MRPK/PK = 1
    • MRPL/MRCL = MRPK/MRCK = 1
    • none of the above
0

Chapter 20: Production and the Demand for Economic Resources

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 12

Wages, rents, interests, and profits are a major determinant of

2 / 12

Which of the following statements is incorrect?

3 / 12

The extra product generated by adding one unit of a resource to the other fixed resources is called

4 / 12

When the firm is a perfect competitor in the product market, its MRP declines because of declining

5 / 12

Which of the following statements is incorrect?

6 / 12

When the firm is a perfect competitor in the resource market, its demand for the variable resource is the schedule of

7 / 12

When the firm is an imperfect competitor in the product market, its MRP declines because of declining

8 / 12

When the firm is an imperfect competitor rather than a perfect competitor in the product market, its demand for the variable resource (other things being equal) is

9 / 12

A firm’s demand for a productive resource increases (i.e., shifts up) when

10 / 12

Which of the following is incorrect? A firm’s demand for a resource is more elastic

11 / 12

When a perfectly competitive firm in the labor and capital markets is maximizing its total profits

12 / 12

When an imperfectly competitive firm in the labor and capital markets is maximizing profits

Chapter 21: Wage Determination

  • If the money-wage index were to rise by 50% between 1990 and 1995 and the price index were to rise by 20% over the same period, then the real wage index would rise by
    • 35%
    • 30%
    • 25%
    • 20%
  • Real wages are higher,
    • the greater the amount of capital available per worker
    • the more advanced the technology of production
    • the greater the availability of natural resources such as fertile land and mineral deposits
    • all of the above
  • Which of the following statements is incorrect?
    • Firms demand labor and other resources in order to produce the products demanded by con­sumers
    • A perfectly competitive firm’s demand for labor is its marginal revenue product of labor schedule or curve
    • Another name for the marginal revenue product of labor is the marginal resource cost of labor
    • The market demand for labor is obtained by adding each firm’s demand for labor
  • The market supply of labor depends on
    • the population size
    • the proportion of the population in the labor force
    • the state of the economy
    • all of the above
  • Which of the following statements is incorrect?
    • The competitive equilibrium wage rate is determined at the intersection of the market demand and supply curve of labor
    • In order to hire more labor, the perfectly competitive firm must pay a higher wage rate
    • The perfectly competitive firm hires labor until the marginal revenue product of labor equals the wage rate
    • If the market demand for labor increases, the equilibrium wage rate rises
  • A firm which is the only buyer of or has monopoly power in the labor (or other resource) market is called a(n)
    • monopolist
    • monopsonist
    • oligopolist
    • oligopsonist
  • Which of the following statements about a monopsonist in the labor market is incorrect?
    • It faces a rising market supply curve of labor
    • The marginal resource cost of labor is rising
    • The wage rate exceeds the marginal resource cost of labor
    • The marginal resource cost of labor curve is above the market supply curve of labor
  • Which of the following statements about a monopsonist is incorrect?
    • To maximize total profits, it hires labor up to the point where MRPL = MRCL
    • The wage that it pays is read from the labor supply curve
    • W is smaller than MRPL
    • W = MRCL
  • If a union is successful in increasing the demand for labor,
    • the wage rate rises but employment falls
    • the wage rate falls but employment rises
    • both the wage rate and employment will rise
    • all of the above are possible
  • The attempt of industrial unions to raise wage rates usually results in
    • higher wages and more employment
    • higher wages and less employment
    • higher wages without affecting employment
    • actually lower wages but more employment
  • The reason for wage differentials is
    • the different attractiveness of different jobs
    • the different skills and training required for different jobs
    • imperfect labor markets
    • all of the above
  • Noncompeting groups refer to workers
    • in jobs of different attractiveness
    • with different capacities, skills, and training
    • in imperfect labor markets
    • all of the above
Wage Determination Salvatore Principles of Economics
Wage Determination (Salvatore Principles of Economics)
0

Chapter 21: Wage Determination

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 12

If the money-wage index were to rise by 50% between 1990 and 1995 and the price index were to rise by 20% over the same period, then the real wage index would rise by

2 / 12

Real wages are higher,

3 / 12

Which of the following statements is incorrect?

4 / 12

The market supply of labor depends on

5 / 12

Which of the following statements is incorrect?

6 / 12

A firm which is the only buyer of or has monopoly power in the labor (or other resource) market is called a(n)

7 / 12

Which of the following statements about a monopsonist in the labor market is incorrect?

8 / 12

Which of the following statements about a monopsonist is incorrect?

9 / 12

If a union is successful in increasing the demand for labor,

10 / 12

The attempt of industrial unions to raise wage rates usually results in

11 / 12

The reason for wage differentials is

12 / 12

Noncompeting groups refer to workers

Chapter 22: Rent, Interest, and Profit

  • When the amount of land is fixed,
    • the supply curve for land is vertical and has zero elasticity
    • the rent on land is actively determined by the demand for land
    • the higher the demand for land, the greater the rent
    • all of the above
  • A tax on land falls
    • entirely on land users
    • entirely on land owners
    • partly on land users and partly on land owners
    • any of the above is possible
  • The interest rate is
    • the price of using money or loanable funds
    • expressed in percentage terms
    • determined by the demand for and the supply of loanable funds
    • all of the above
  • In order to maximize profits, a firm borrows until the return on investment
    • equals the rate of interest
    • exceeds the rate of interest
    • is smaller than the rate of interest
    • any of the above
  • The interest rate serves to allocate the scarce loanable funds to
    • the most needed uses
    • the most productive uses
    • the most liquid uses
    • none of the above
  • The interest rate charged on a loan depends on
    • the risk of the loan
    • the maturity of the loan
    • the administrative cost and competitive conditions of the loan
    • all of the above
  • Profit is equal to total revenue minus
    • explicit costs
    • implicit costs
    • implicit and explicit costs
    • wages and rents
  • Which of the following statements is not true with regard to profit?
    • It may arise from diminishing returns
    • It may arise from introducing an innovation
    • It may be the reward for uncertainty
    • It may arise from monopoly power
  • Which is not a function of profit?
    • To encourage innovations
    • To shift resources to the production of those commodities that society wants most
    • To increase costs of production
    • To reward efficiency
  • Which of the following is not true with regard to the functioning of a free-enterprise economy?
    • It is a vast and interdependent system
    • It is a partial equilibrium system
    • The questions of what, how, and for whom to produce are answered simultaneously
    • It is a general equilibrium system
  • The most efficient allocation of resources is prevented in the real world by
    • imperfect competition
    • the existence of social goods
    • divergencies between social and private benefits and costs
    • all of the above
0

Chapter 22: Rent, Interest, and Profits

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 11

When the amount of land is fixed,

2 / 11

A tax on land falls

3 / 11

The interest rate is

4 / 11

In order to maximize profits, a firm borrows until the return on investment

5 / 11

The interest rate serves to allocate the scarce loanable funds to

6 / 11

The interest rate charged on a loan depends on

7 / 11

Profit is equal to total revenue minus

8 / 11

Which of the following statements is not true with regard to profit?

9 / 11

Which is not a function of profit?

10 / 11

Which of the following is not true with regard to the functioning of a free-enterprise economy?

11 / 11

The most efficient allocation of resources is prevented in the real world by

Chapter 23: International Trade & Finance

  • Most nations of the world are
    • closed economies
    • open economies
    • self-sufficient
    • non-trading nations
  • The production-possibilities (or transformation) curves of two nations usually differ because of
    • difference in tastes between the two nations
    • a difference in the availability of resources
    • constant costs
    • increasing costs
  • A specific argument advanced for protection is
    • to protect domestic labor against cheap foreign labor
    • to reduce domestic unemployment
    • to protect infant industries and industries important for national defence
    • all of the above
  • Which of the following is not included in the current account section of the balance of payments?
    • The export of goods and services
    • The import of goods and services
    • Capital inflows
    • Government grants
  • A deficit or surplus in a nation’s balance of payments is measured by subtracting all the debits from all the credits in the
    • current account
    • current and capital accounts
    • current, capital, and official reserve accounts
    • capital and official reserve accounts
  • The rate of exchange between the domestic and a foreign currency is defined as the
    • foreign currency price of a unit of the domestic currency
    • domestic currency price of a unit of the foreign currency
    • foreign currency price of gold
    • domestic currency price of gold
  • Under a freely-flexible-exchange-rate system, a deficit in a nation’s balance of payments is cor­rected by
    • a decrease in the domestic currency price of the foreign currency
    • an appreciation of domestic currency
    • a depreciation of the domestic currency
    • a depreciation of the foreign currency
  • A serious current international economic problem is
    • the lack of generally acceptable rules for intervention in foreign exchange markets
    • worldwide inflation
    • the sharp rise in petroleum prices
    • all of the above
0

Chapter 23: International Trade and Finance

Quiz with Answers

Principles of Economics Schaum’s Outline

1 / 8

Most nations of the world are

2 / 8

The production-possibilities (or transformation) curves of two nations usually differ because of

3 / 8

A specific argument advanced for protection is

4 / 8

Which of the following is not included in the current account section of the balance of payments?

5 / 8

A deficit or surplus in a nation’s balance of payments is measured by subtracting all the debits from all the credits in the

6 / 8

The rate of exchange between the domestic and a foreign currency is defined as the

7 / 8

Under a freely-flexible-exchange-rate system, a deficit in a nation’s balance of payments is corrected by

8 / 8

A serious current international economic problem is

Other Chapters of Salvatore Principles of Economics

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