Explain how the AA schedule is derived
What will be an ideal response?
For a fixed real money supply, an increase in output leads to an increase in the domestic interest rate. In the foreign exchange market, an increase in the domestic interest rate leads to a lower nominal exchange rate, thus appreciating the currency. Therefore, the relationship between nominal exchange rate and output is negative; this leads to a negative slope of the AA schedule, which has the nominal exchange rate and output on its axes.
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Regardless of what types of workers are available in different countries, unrestricted labor outsourcing always results in an equalization of wages across countries.
Answer the following statement true (T) or false (F)
The public interest theory of government regulation is optimistic
Indicate whether the statement is true or false
In practice, you may want to use the OLS estimator instead of the WLS because
A) heteroskedasticity is seldom a realistic problem B) OLS is easier to calculate C) heteroskedasticity robust standard errors can be calculated D) the functional form of the conditional variance function is rarely known
Which of the following is not associated with the monopoly market structure?
A. many sellers B. a single seller C. a unique product D. impossible entry into the market