Other Things Remaining the Same, the U

question 445

Multiple Choice

Other things remaining the same, the U.S. interest rate differential increases if the U.S. interest rate

• A) remains constant and foreign interest rates fall.
• B) falls and foreign interest rates remain constant.
• C) falls and foreign interest rates rise.
• D) remains constant and foreign interest rates rise.

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the cost per unit of output decreases with increasing scale.

Specialization of Labor

The division of labor where individuals focus on a limited scope of tasks or skills, leading to increased efficiency and productivity.

Average Fixed Costs

The fixed costs of production (costs that do not vary with the level of output) divided by the quantity of output produced.

Output

Output is the total amount of goods or services produced by a person, machine, business, or country.