Under the monetary approach to exchange rate theory, money supply growth at a constant rate A) eventually results in ongoing price level deflation at the same rate, but changes in this long-run deflation rate do not affect the full-employment output level or the long-run relative prices of goods and services. B) eventually results in ongoing […]
Points to the left of the IS curve represent excess demand for goods. Indicate whether the statement is true or false ANSWER TRUE
Interindustry trade is not based on comparative advantage since it consists of the export and import of similar countries and mostly between countries that have similar productivity, technology, and factor endowments. Indicate whether the statement is true or false ANSWER FALSE
Forward and spot exchange rates A) are necessarily equal. B) do not move closely together. C) are always such that the forward exchange rate is higher. D) move closely together and are equal on the value date. E) are unrelated to the value date. ANSWER D
Current account surpluses are offset by A) the liquidity balances. B) capital account deficits. C) unilateral transfers. D) balance of trade surpluses. ANSWER B
Leontief reconciled his results by arguing that A) American labor is more efficient than foreign. B) American capital is more efficient than foreign. C) Foreign capital is more efficient than American. D) Foreign labor is more efficient than American. ANSWER A
The monetary approach makes the general prediction that A) the exchange rate, which is the relative price of American and European money, is fully determined in the long run by the relative supplies of those monies. B) the exchange rate, which is the relative price of American and European money, is fully determined in the […]
Refer to above figure. Given the opportunity to sell at world prices, the marginal (opportunity) cost of selling a ton domestically is what? What will be an ideal response? ANSWER $5/ton.
Internal balance can be graphically represented as the intersection of the IS curve with the LM curve. Indicate whether the statement is true or false ANSWER TRUE
Which of the following statements is the MOST accurate? In general A) the monetary approach to the exchange rate is a long run theory. B) the monetary approach to the exchange rate is a short run theory. C) the monetary approach to the exchange rate is both a short and long run theory. D) the […]
