Under a managed float, if U.S. GDP suddenly increased, which of the following actions would the Bank of England need to take in order to stop any movement in the dollar-pound exchange rate?
a. Buy British pounds for dollars in order to shift the demand curve for pounds leftward
b. Sell British pounds for dollars in order to shift the supply curve for pounds leftward
c. Sell British pounds for dollars in order to shift the supply curve for pounds rightward
d. Buy British pounds for dollars in order to shift the demand curve for pounds rightward
e. Do nothing, since purchasing power parity will correct the situation in the short run.
C
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Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?
A) Restaurants compete in small market areas—neighborhoods and cities—rather than in regional or national markets. Therefore, restaurants are not small relative to their market size. B) Restaurants usually have entry barriers in the form of zoning restrictions and health regulations. C) Restaurants do not sell identical products. D) Restaurants have significant liability costs that perfectly competitive firms do not have; for example, customers may sue if they suffer from food poisoning.
Which of the following is most likely to lead to an increase of 1% in the nominal demand for money?
A) An increase in real income of 0.5% B) A decrease in real income of 0.5% C) A decline of 1% in the price level D) An increase of 1% in the price level
A currency appreciation will be most likely to
a. reduce net exports and therefore increase aggregate demand. b. raise net exports and therefore decrease aggregate demand. c. reduce net exports and therefore decrease aggregate demand. d. raise net exports and therefore increase aggregate demand.
Economic stagnation coupled with high inflation is commonly called:
A. stagflation. B. inflationary stagnation. C. stagnatory growth. D. inflagnation.