When the Fed practices contractionary monetary policy, the interest rate goes:
A. up, and the exchange rate will appreciate as a result.
B. down, and the exchange rate will depreciate as a result.
C. down, and the exchange rate will appreciate as a result.
D. up, and the exchange rate will depreciate as a result.
Answer: A
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In a non-cooperative, imperfect information, simultaneous-choice, one-period game, a Nash equilibrium
A) will never exist. B) will always include dominant strategies. C) will always result in both players taking the same action. D) may not maximize the sum of the firms' profits.
Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:
A. zero. B. infinite. C. one. D. unknown.
To prevent the dollar from depreciating, the U.S. central bank can try to fix the currency value of the dollar when they
A. buy foreign currencies in the foreign exchange market. B. sell U.S. dollars in the foreign exchange market. C. abandon the U.S. dollar and use another country's currency as its legal currency. D. buy U.S. dollars in the foreign exchange market.
An economy in which a central authority draws up a plan that establishes what will be produced and when, sets production goals, and makes rules for distribution is a
A. free-market economy. B. command economy. C. laissez-faire economy. D. public-goods economy.