Microeconomics Exam Solutions
Course Introduction
Microeconomics is the branch of economics that focuses on individual agents within the economy, such as households, firms, and markets, and analyzes how they make decisions regarding the allocation of limited resources. This course explores concepts including supply and demand, consumer behavior, production and cost structures, market equilibrium, and various market forms like perfect competition, monopoly, and oligopoly. Students will learn how prices are determined, how resources are allocated efficiently, and the impact of government interventions on market outcomes, equipping them with tools for understanding and analyzing real-world economic issues on a smaller, more focused scale.
Recommended Textbook Economics 4th Edition by R. Glenn Hubbard
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Chapter 1: Economics: Foundations and Models
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Q1) Economists assume that rational behavior is useful in explaining choices people make
A) because irrational people do not make economic choices.
B) even though people may not behave rationally all the time.
C) because individuals act rationally all the time in all circumstances.
D) even though people rarely, if ever, behave in a rational manner.
Answer: B
Q2) Consider the following economic agents: a.the government B)consumers
C)producers
Who,in a centrally planned economy,decides what goods and services will be produced with the scarce resources available in that economy?
A) the government
B) producers
C) consumers
D) consumers and producers
E) the government, consumers and producers
Answer: A
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Chapter 2: Trade-Offs, comparative Advantage, and the Market System
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Q1) According to the production possibility model,if more resources are allocated to the production of physical and human capital,then which of the following is likely to happen?
A) fewer goods will be produced for consumption today.
B) the production possibilities frontier will be shift inward in the future
C) future economic growth will decline.
D) the country's total production will fall.
Answer: A
Q2) The principle of opportunity cost is that
A) in a market economy, taking advantage of profitable opportunities involves some money cost.
B) the economic cost of using a factor of production is the alternative use of that factor that is given up.
C) taking advantage of investment opportunities involves costs.
D) the cost of production varies depending on the opportunity for technological application.
Answer: B
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Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
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Q1) Holding everything else constant,an increase in the price of MP3 players will result in
A) a decrease in the quantity of MP3 players supplied.
B) a decrease in the demand for MP3 players.
C) an increase in the supply of MP3 players.
D) a decrease in the quantity of MP3 players demanded.
Answer: D
Q2) Refer to Figure 3-5.In a free market such as that depicted above,a surplus is eliminated by
A) a price increase, increasing the supply and decreasing the demand.
B) a price decrease, decreasing the supply and increasing the demand.
C) a price decrease, decreasing the quantity supplied and increasing the quantity demanded.
D) a price increase, increasing the quantity supplied and decreasing the quantity demanded.
Answer: C
Q3) Market equilibrium occurs where supply equals demand.
A)True
B)False
Answer: False
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Chapter 4: Economic Efficiency, government Price Setting, and Taxes
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Sample Questions
Q1) Paul goes to Sportsmart to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.Paul's consumer surplus from the purchase is
A) $325
B) $200
C) $125
D) $75
Q2) What is "tax incidence"? What determines tax incidence in a competitive market?
Q3) Each point on a ________ curve shows the willingness of consumers to purchase a product at different prices.
A) demand
B) supply
C) production possibilities
D) marginal cost
Q4) Economic efficiency in a competitive market is achieved when A) economic surplus is equal to consumer surplus.
B) consumers and producers are satisfied.
C) the marginal benefit equals the marginal cost from the last unit sold.
D) producer surplus equals the total amount firms receive from consumers minus the cost of production.
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Chapter 5: Externalities, environmental Policy, and Public Goods
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Sample Questions
Q1) Refer to Figure 5-2.The private profit maximizing quantity for the firm is
A) Q<sub>a</sub>.
B) Q<sub>b</sub>.
C) Q<sub>b</sub> - Q<sub>d</sub>.
D) Q<sub>d</sub>.
Q2) Refer to Figure 5-7.The current market equilibrium output is partly the result of overfishing.In that case,what does S<sub>2</sub> represent?
A) the private marginal benefit of harvesting salmon
B) the social marginal benefit of harvesting salmon
C) the private marginal cost of harvesting salmon
D) the social marginal cost of harvesting salmon
Q3) Some critics of the U.S.Environmental Protection Agency's proposed NSPS air pollution regulations which are designed to reduce carbon dioxide emissions argue that the policy will
A) significantly increase electric utility rates.
B) ultimately result in an increase in carbon dioxide emissions.
C) increase greenhouse gases in exchange for the reduction of carbon dioxide.
D) result in an increase in the consumption of fossil fuels.
Q4) State the Coase theorem.
Q5) How does a negative externality in production reduce economic efficiency?
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Chapter 6: Elasticity: The Responsiveness of Demand and Supply
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Q1) The price elasticity of demand for Stork ice cream is -4.Suppose you're told that following a price increase,quantity demanded fell by 10 percent.What was the percentage change in price that brought about this change in quantity demanded?
A) 40 percent
B) 25 percent
C) 2.5 percent
D) 0.4 percent
Q2) Which of the following is one reason why the income of small family farms has decreased over time?
A) Technology has increase farm productivity and market supply.
B) The demand for farm products is price elastic.
C) The demand for farm products is income inelastic.
D) The U.S. population has increased greatly since 1950.
Q3) Suppose the price of gasoline in July 2004 averaged $1.35 a gallon and 15 million gallons a day were sold.In October 2004,the price averaged $2.15 a gallon and 14 million gallons were sold.If the demand for gasoline did not shift between these two months,use the midpoint formula to calculate the price elasticity of demand.Indicate whether demand was elastic or inelastic.
Q4) Explain the relationship between price elasticity of demand and total revenue.
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Chapter 7: The Economics of Health Care
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Q1) Briefly explain 4 of the difficulties in making cross-country comparisons in health care outcomes.
Q2) The Congressional Budget Office estimates that most of the increase in federal spending on Medicare and Medicaid will be due to
A) the aging population.
B) increases in the cost of providing health care.
C) increases in immigration.
D) declining income levels.
Q3) Which of the following is not an advantage to an insurance company of insuring a large group of people for health insurance?
A) The characteristics of a large group are likely to reflect those of the entire population.
B) It is easier to accurately predict the number of claims for a group than for an individual.
C) When all group members pay the premium, the problem of moral hazard is reduced.
D) When all group members pay the premium, the problem of adverse selection is reduced.
Q4) What are the main sources of health insurance in the United States?
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Chapter 8: Firms, the Stock Market, and Corporate Governance
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Sample Questions
Q1) How much is a bond that pays $50 in coupon payments for 3 years and $1,000 at the end of the third year worth if the interest rate is 10%?
A) $876
B) $952
C) $1,045
D) $1,150
Q2) What is the difference between explicit and implicit costs?
Q3) Which of the following is not an advantage of starting a new business as a corporation?
A) separation of ownership and business liability
B) enhanced ability to raise funds
C) ability to share risks
D) possibility of double taxation
Q4) The person hired by a corporation's board of directors to run the day-to-day operations of the corporation is known as the
A) chairman of the board.
B) chief executive officer.
C) owner-manager.
D) corporate governor.
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Chapter 9: Comparative Advantage and the Gains From International Trade
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Sample Questions
Q1) The main purpose of most tariffs and quotas is to
A) raise revenue for the government.
B) reduce the prices consumers pay for goods and services.
C) reduce the foreign competition that domestic firms face.
D) improve the quality of goods and services imported into the country.
Q2) Refer to Figure 9-2.The tariff causes domestic consumption of rice
A) to fall by 27 million pounds.
B) to fall by 11 million pounds.
C) to rise by 6 million pounds.
D) to rise by 16 million pounds.
Q3) Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries.This protectionism will cause the greatest harm to A) Canadian manufacturers.
B) the Canadian government.
C) manufacturers who export to Canada.
D) Canadian consumers.
Q4) A tariff is a numerical limit on the quantity of a good that can be imported.
A)True B)False
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Chapter 10: Consumer Choice and Behavioral Economics
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Sample Questions
Q1) If you received negative marginal utility from consuming the 4th slice of pizza,then your total utility from 4 slices of pizza must be less than your total utility from 3 slices of pizza.
A)True
B)False
Q2) What is a Giffen good?
Q3) When the price of summer tank tops falls and you buy more of them because they are relatively less expensive,this is called
A) the substitution effect.
B) the income effect.
C) the deadweight loss effect.
D) the elasticity effect.
Q4) Total utility
A) cannot decrease as a person consumes more and more of a good.
B) has a constant rate of increase as a person consumes more and more of a good.
C) is equal to the sum of the marginal utilities of all units consumed.
D) is negative when marginal utility is declining.
Q5) List three reasons why demand for a product will often increase if the product is endorsed by a celebrity.
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Chapter 11: Technology, production, and Costs
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Sample Questions
Q1) The long-run average cost curve shows
A) the lowest average cost of producing every level of output in the long run.
B) where the most profitable level of output occurs.
C) the average cost of producing where diminishing returns are not present.
D) the plant size or scale that the firm should build.
Q2) Refer to Figure 11-8.Which of the following could explain why the United States and China use different input combinations to produce a given quantity of cotton and yet,each country produces that quantity at the lowest possible cost?
A) because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in the United States
B) because the prices of inputs are not the same for the two countries: labor is relatively lower-priced and capital is relatively higher priced in China
C) because the United States has more sophisticated technology and therefore is more efficient in cotton production
D) because the marginal product per dollar spent on capital yields a higher return in the United States than in China
Q3) What are economies of scale? What are diseconomies of scale?
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Chapter 12: Firms in Perfectly Competitive Markets
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Q1) Refer to Figure 12-2.What happens if the firm produces more than Q<sub>4</sub> units?
A) Its profit increases.
B) It makes a loss.
C) Its total revenue is increasing faster than its total cost.
D) It could make a profit or a loss depending on what happens to demand.
Q2) If,for the last unit of a good produced by a perfectly competitive firm,MR > MC,then in producing it,the firm
A) added more to total costs than it added to total revenue.
B) added more to total revenue than it added to total cost.
C) is maximizing marginal profit.
D) has minimized its losses.
Q3) Using two graphs,illustrate how a positive technological change in the market for notebook computers could eliminate short-run economic profit for a firm in that market.On the first graph,use a supply and demand graph to illustrate the positive technological change.On the second graph,use demand,ATC,MC and MR curves to illustrate the elimination of economic profit resulting from the positive technological change.Explain what is taking place in each graph.
Q4) Under what conditions should a competitive firm shut down in the short run?
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Chapter 13: Monopolistic Competition: The Competitive Model
in a More Realistic Setting
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Q1) For productive efficiency to hold,
A) price must equal the marginal cost of the last unit produced.
B) price must equal marginal revenue of the last unit sold.
C) average variable cost is minimized in production.
D) average total cost is minimized in production.
Q2) Refer to Figure 13-6.What is the monopolistic competitor's profit maximizing price?
A) P<sub>1</sub>
B) P<sub>2</sub>
C) P<sub>3</sub>
D) P<sub>4</sub>
Q3) A trademark is
A) a legal instrument which grants a firm the right to differentiate its product.
B) a legal right to position a firm's product in high-traffic public areas such as airports and post offices.
C) a patent on a firm's product.
D) a distinguishing attribute such as a sign or logo that allows a firm to uniquely identify its product.
Q4) What is the difference between the terms "marketing" and "advertising"?
Page 15
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Chapter 14: Oligopoly: Firms in Less Competitive Markets
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Sample Questions
Q1) Producing a differentiated product occurs in which of the following industries?
A) oligopoly, monopolistic competition and perfect competition
B) monopolistic competition only
C) oligopoly only
D) monopolistic competition and oligopoly
Q2) If an industry is made up of five identical firms,the four-firm concentration ratio is
A) 5%.
B) 20%.
C) 80%.
D) 100%.
Q3) Refer to Figure 14-2.If the government delays Gigacom's entry and Xenophone moves first,is a threat by Gigacom that it will provide DSL service if Gigacom provides cable service a credible threat?
A) No, because Gigacom will lose $4.5 million in profits if it carries out its threat.
B) Yes, because Gigacom's DSL service will drive Xenophone out of business.
C) No, because as a second mover, it has no choice but to abide by the choices of the first mover.
D) Yes, Xenophone stands to lose $3 million in profit.
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Chapter 15: Monopoly and Antitrust Policy
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Sample Questions
Q1) A monopoly is characterized by all of the following except A) there are only a few sellers each selling a unique product.
B) entry barriers are high.
C) there are no close substitutes to the firm's product.
D) the firm has market power.
Q2) Refer to Table 15-2.What is the amount of the deadweight loss generated by Shakti when it produces the monopoly output?
A) $124
B) $42
C) $36
D) $12
Q3) Refer to Figure 15-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?
A) $38
B) $54
C) $68
D) $75
Q4) What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?
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Chapter 16: Pricing Strategy
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Q1) Refer to Figure 16-1.What is the consumer surplus received under perfect price discrimination?
A) the area under the demand curve above P<sub>1</sub>
B) the area under the demand curve above P<sub>3</sub>
C) the area under the demand curve above P<sub>4</sub>
D) zero
Q2) Which of the following statements is true about optimal two-part tariff and perfect price discrimination for a given demand curve?
A) The total revenue received under the two pricing schedules is the same.
B) The total revenue received under an optimal two-part tariff exceeds that received under perfect price discrimination.
C) The total revenue received under an optimal two-part tariff is less than that received under perfect price discrimination.
D) The total revenue received under an optimal two-part tariff could be greater than, less than or equal to that received under perfect price discrimination, depending on the fixed-fee portion of the two-part tariff.
Q3) Why is it necessary for a firm that practices price discrimination be a price maker rather than a price taker?
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Chapter 17: The Markets for Labor and Other Factors of Production
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Q1) The supply curve of a uniquely talented actor or superstar athlete will be perfectly inelastic.
A)True
B)False
Q2) Why do professional basketball players earn more than police officers? Illustrate this situation graphically.
Q3) That some talented people may not enter an occupation because they have heard that people with their personal characteristics do not get hired in that occupation is known as
A) economic discrimination.
B) a compensating difference.
C) a negative feedback loop.
D) worker discrimination.
Q4) Economic discrimination takes place when an employer
A) pays workers the lowest wage possible.
B) pays workers different wages on the basis of some arbitrary characteristics of workers that are irrelevant to the job performed.
C) pays lower wages to workers who are not as productive as other workers.
D) pays workers compensating wage differentials.
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Chapter 18: Public Choice, taxes, and the Distribution of Income
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Q1) Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,the consumer's burden of the tax
A) is greater under the more elastic supply curve S<sub>0</sub>.
B) is greater under the less elastic supply curve S<sub>0</sub>.
C) is greater under the less elastic supply curve S<sub>1</sub>.
D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior.
Q2) Refer to Table 18-1.Suppose a series of votes are taken in which each pair of alternatives is considered in turn.The first pair considered is between subsidies for education and research on Alzheimer's.The second pair considered is between Alzheimer's research and increased border security.The third pair considered is between education subsidies and increased border security.In this case,the collective preferences of the voters
A) turn out to be transitive and will yield a consistent outcome.
B) turn out to be transitive but will not result in a consistent outcome.
C) turn out not to be transitive and will not result in a consistent outcome.
D) turn out not to be transitive but will yield a consistent outcome.
Q3) What is the difference between the voting paradox and the Arrow impossibility theorem?
Page 20
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Chapter 19: GDP: Measuring Total Production and Income
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Q1) Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so,how?
Q2) What is the largest component of spending in the United States?
A) consumption spending
B) investment spending
C) government spending
D) net investment spending
Q3) Refer to Table 19-2.Suppose that a simple economy produces only four goods and services: shoes,DVDs,tomatoes,and ketchup.Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households.Using the information in the above table,nominal GDP for this simple economy equals
A) $7,400.
B) $6,400.
C) $5,800.
D) 2,440 units.
Q4) What are the differences between national income,personal income,and disposable personal income?
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Chapter 20: Unemployment and Inflation
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Q1) Counting part-time workers who are looking for full-time work as employed overstates the degree of joblessness in the economy.
A)True
B)False
Q2) Which of the following policies would reduce structural unemployment?
A) an increase in the minimum wage
B) a job retraining program
C) implementing an unemployment insurance policy
D) building an on-line job database that helps workers find jobs
Q3) A student who just graduated from college but has not found a job would most likely be
A) frictionally unemployed.
B) structurally unemployed.
C) cyclically unemployed.
D) seasonally unemployed.
Q4) In the United States,the typical person who has lost his or her job finds another one in a few months except during severe recessions.
A)True
B)False
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Chapter 21: Economic Growth, the Financial System, and Business Cycles
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Q1) A firm can fund an expansion of its operations by
A) issuing bonds.
B) buying stock.
C) paying dividends.
D) loaning money.
Q2) Which of the following will not occur as the result of a decrease in net taxes?
A) decreased household saving
B) decreased government saving
C) a shift to the left of the supply curve for loanable funds
D) all of the above
Q3) Refer to Table 21-1.Using the table above,what is the approximate growth rate of real GDP from 2010 to 2011?
A) 1%
B) 2%
C) 3%
D) 4%
Q4) Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.
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Q5) What is "human capital," and how does human capital affect labor productivity and economic growth?
Chapter 22: Long-Run Economic Growth: Sources and Policies
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Q1) Would you expect to see higher or lower growth rates for countries that start out with a relatively low level of real GDP per capita? Explain using the concept of "catch-up" and support your answer with a graph.
Q2) Growth in real GDP per capita for the world economy was greatest during
A) the seventeenth century.
B) the eighteenth century.
C) the nineteenth century.
D) the twentieth century.
Q3) Countries that are more globalized tend to have
A) lower levels of real GDP per capita.
B) a higher likelihood of war or revolution.
C) higher growth rates in real GDP per capita.
D) lower levels of foreign direct investment.
Q4) Foreign portfolio investment occurs when an individual or firm buys stock or bonds issued in another country.
A)True
B)False
Q5) What features made England in the eighteenth century the place where the Industrial Revolution occurred?
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Chapter 23: Aggregate Expenditure and Output in the Short Run
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Q1) Refer to Table 23-2.Given the consumption schedule in the table above,the marginal propensity to save is
A) 0.1.
B) 0.4.
C) 0.7.
D) 0.9.
Q2) What is the difference between aggregate expenditure and consumption spending?
Q3) Which of the following correctly describes how an increase in the price level affects consumption spending?
A) An increase in the price level raises real wealth, which causes consumption to increase.
B) An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
C) An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
D) An increase in the price level lowers real wealth, which causes consumption to decrease.
Q4) Why do economists care about aggregate expenditures?
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Chapter 24: Aggregate Demand and Aggregate Supply Analysis
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Q1) Refer to Figure 24-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y<sub>1</sub> represents potential GDP.
A) A and B
B) A and C
C) C and D
D) B and D
Q2) Refer to Figure 24-2.Ceteris paribus,an increase in workers and firms adjusting to having previously overestimated the price level would be represented by a movement from
A) SRAS<sub>1</sub> to SRAS<sub>2</sub>.
B) SRAS<sub>2</sub> to SRAS<sub>1</sub>.
C) point A to point B.
D) point B to point A.
Q3) If the U.S.dollar decreases in value relative to other currencies,how does this affect the aggregate demand curve?
A) This will move the economy up along a stationary aggregate demand curve.
B) This will move the economy down along a stationary aggregate demand curve.
C) This will shift the aggregate demand curve to the left.
Page 26
D) This will shift the aggregate demand curve to the right.
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Chapter 25: Money, banks, and the Federal Reserve System
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Q1) Refer to Scenario 25-2.As a result of Kristy's deposit,Bank A's reserves immediately increase by
A) $2,000.
B) $8,000.
C) $10,000.
D) $50,000.
Q2) If people speculate that a run on one bank will cause a run on all banks in the financial system,and this speculation proves accurate,then the financial system would experience what is known as a
A) commodity crisis.
B) securitization meltdown.
C) bank panic.
D) institutional death spiral.
Q3) Hyperinflation can be caused by
A) the government selling bonds to the central bank.
B) the central bank selling bonds to the public.
C) the government selling bonds to the public.
D) the central bank selling bonds to the government.
Q4) Although gold is highly valued by most people,it is difficult to use as a medium of exchange.Explain.
Page 27
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Chapter 26: Monetary Policy
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Q1) The supporters of a monetary growth rule believe that active monetary policy
A) stabilizes the economy, decreasing the number of recessions and their severity.
B) destabilizes the economy, increasing the number of recessions and their severity.
C) cannot change the inflation rate.
D) cannot change real GDP.
Q2) Monetary policy could be procyclical if the Federal Reserve
A) is late recognizing that a recession has begun and conducts expansionary monetary policy.
B) is quick to recognize that a recession has begun and conducts expansionary monetary policy.
C) is late recognizing that a recession has begun and does not conduct expansionary monetary policy.
D) is quick to recognize that a recession has begun and does not conduct expansionary monetary policy.
Q3) Using the money demand and money supply model,show and explain why the Federal Reserve cannot achieve a target for both the money supply and an interest rate.
Q4) List the Fed's four main monetary goals.
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Chapter 27: Fiscal Policy
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Sample Questions
Q1) Expansionary fiscal policy
A) can be effective in the short run.
B) causes complete crowding out in the short run.
C) is never effective because of crowding out.
D) can be effective in the long run.
Q2) Crowding out refers to a decline in ________ as a result of an increase in ________.
A) tax revenues; unemployment
B) government purchases; tax rates
C) government purchases; private expenditures
D) private expenditures; government purchases
Q3) Contractionary fiscal policy is used to decrease aggregate demand in an attempt to fight rising inflation.
A)True
B)False
Q4) An increase in government purchases will increase aggregate demand because
A) government expenditures are a component of aggregate demand.
B) consumption expenditures are a component of aggregate demand.
C) the decline in the price level will increase demand.
D) the decline in the interest rate will increase demand.
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Chapter 28: Inflation, unemployment, and Federal Reserve Policy
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Sample Questions
Q1) If actual inflation is less than expected inflation,actual real wages will be ________ expected real wages and unemployment will ________.
A) greater than; rise
B) greater than; fall
C) less than; rise
D) less than; fall
Q2) Refer to Figure 28-4.A follower of the new classical macroeconomics would argue that a contractionary monetary policy to lower inflation after a supply shock,like that pursued by Volcker in 1979,would result in a movement from ________.
A) A to D to C
B) A to B
C) C to D to A
D) C to A
E) A to C
Q3) Does the short-run Phillips curve have a positive or negative slope? Explain how this slope is derived.
Q4) If firms and workers have adaptive expectations,what impact will expansionary monetary policy have on inflation,unemployment,and the Phillips curve?
Page 30
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Chapter 29: Macroeconomics in an Open Economy
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Sample Questions
Q1) Refer to Table 29-1.Given the following exchange rates in the above table,what are the exchange rates stated as U.S.dollars per Mexican peso and U.S.dollars per British pound respectively?
A) 0.10 dollars per peso and 2.00 dollars per pound
B) 1.00 dollars per peso and 20.00 dollars per pound
C) 0.01 dollars per peso and 0.20 dollars per pound
D) 0.10 dollars per peso and 5.00 dollars per pound
E) 0.01 dollars per peso and 0.50 dollars per pound
Q2) If currency speculators decide that the value of the dollar should rise in the future relative to the yen,this will increase the demand for dollars and decrease the supply of dollars.
A)True
B)False
Q3) Is fiscal policy more or less effective in manipulating aggregate demand in an open economy?
Q4) How is the impact of expansionary fiscal policy different in an open economy than in a closed economy?
Q5) Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?
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Chapter 30: The International Financial System
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Sample Questions
Q1) A Big Mac costs $4.00 in the United States and 9.00 reals in Brazil.If the exchange rate is 2 reals per dollar,what is the dollar cost of a Big Mac in Brazil?
A) $0.89
B) $2.25
C) $4.50
D) $8.00
Q2) By 2011,how many European countries were members of the European Union?
A) 12
B) 15
C) 27
D) 57
Q3) One reason purchasing power parity does not exactly hold is that many goods are not traded internationally.
A)True
B)False
Q4) Both countries involved in a pegging of currency must agree to the terms of the pegging.
A)True
B)False
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