When a country experiences capital flight its
a. net capital outflow increases and its real exchange rate rises.
b. net capital outflow increases and its real exchange rate falls.
c. net capital outflow decreases and its real exchange rate rises.
d. net capital outflow decreases and its real exchange rate falls.
b
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Refer to the figure above. If the government of China wants to keep the exchange rate below E yuan per dollar:
A) it will have to buy dollar and sell yuan. B) it will have to buy yuan and sell dollars. C) it will have to buy both dollars and yuan. D) it will have to sell both dollars and yuan.
What all "New Classical" models have in common is the assumption of
A) imperfect information. B) continuous clearing of product and labor markets. C) the primary importance of technological and supply shocks in causing business cycles. D) downward nominal wage rigidity. E) countercyclical real wages.
On the graph above, movement from point ________ to point ________ might occur if there is a negative demand shock, followed by updating of expected inflation
A) F; G B) H; I C) H; F D) F; H E) none of the above
The price elasticity of demand measures consumer responsiveness to a price change
a. True b. False Indicate whether the statement is true or false