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Explain the effects of a permanent increase
Explain the effects of a permanent increase in the U.S. money supply in the short run and in the long run. Assume that the U.S. real national income is constant.An increase in the ...
Benefit(s) of the gold standard include
A.asymmetryB.making real values of national monies more stable andC.limiting moneyD.Both A andE.Both B andAnswer: E
If people expect relative PPP to hold,
A.the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected, in the United States and Europe, ove...
How many British pounds would it cost to buy a pair
How many British pounds would it cost to buy a pair of American designer jeans costing $45 if the exchange rate is 1.60 dollars per British pound?A.125 British poundsB.125 British ...
If the dollar interest rate is 10 percent,
If the dollar interest rate is 10 percent, the euro interest rate is 6 percent, and the expected return on dollar depreciation against the euro is zero percent, thenA.an investor s...
Analyze the effects of an increase in the
Analyze the effects of an increase in the European money supply on the dollar/euro exchangeAnswer: The main points are: An increase in the European money supply will reduce the int...
What are the factors affecting the
What are the factors affecting the demand for foreign currency?Answer: Three factors affect the demand for foreign currency. They are expected return, risk, and liquidity.
Japan’s external surplus,
Japan's external surplus, represented in the equation X-M=S-I, shows that their amount of export beyond imports of goods and services is the same as the amount of:A.domestic saving...
The DD schedule shows
A.interest rate and output pairs for which aggregate demand equals aggregate output.B.exchange rate and output pairs for which aggregate demand equals aggregate output.C.exchange r...
When a country’s currency is devalued,
A.outputB.outputC.the money supplyD.the money supplyE.Both B andAnswer: E. When a currency is devalued, output and the money supply expand as the economy’s equilibrium shifts outw...
Suppose that the one-year forward price of euros
Suppose that the one-year forward price of euros in terms of dollars is equal to $1.113 per euro. Further, assume that the spot exchange rate is $1.05 per euro, and the interest ra...
In the short run,
A.the interest rate can rise when the domestic money supplyB.the interest rate can decrease when the domestic money supplyC.the interest rate stays constant when the domestic money...






