The figure below depicts the IS-LM-FE model with floating exchange rates.
Following the shift of the economy from point A to point B, the shift of the FE curve from FE0 to FE1 was caused by
A. official intervention in the foreign exchange market.
B. an improvement in current account position.
C. an appreciation of the country's currency.
D. a contractionary monetary policy.
Answer: C
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Sugarcane can be used to produce both granulated sugar and ethanol. Recent regulations in certain countries now permit a higher amount of ethanol to be added to gasoline. As a result of these changes, an economist would expect granulated sugar prices to ____, and quantity sold to ____.
A. rise; rise. B. fall; fall. C. rise; fall. D. fall; remain the same.
Ownership of a corporation is divided into shares that are claims on the firm's __________ and these shares are also referred to as ____________
a. assets and liabilities; bonds b. assets and liabilities; stocks c. liabilities and earnings; stocks d. assets and earnings; stocks e. assets and earnings; bonds
If there is an increase in the amount of currency held outside banks, then the
A) quantity of money and the monetary base will decrease. B) monetary base will decrease. C) quantity of money will increase. D) quantity of money will not change. E) quantity of money will decrease.
Refer to Figure 4-11. What is the value of consumer surplus after the imposition of the price floor?
A) $1,500 B) $2,700 C) 4,500 D) $5,700