Assume that policy makers are pursuing a fixed exchange rate regime and that the economy is initially operating at the natural level. Which of the following will occur as a result of a evaluation?
A) The real exchange rate will be permanently higher in the medium run.
B) The real exchange rate will be permanently lower in the medium run.
C) The effects of this devaluation on the real exchange rate will be ambiguous in the medium run.
D) The nominal exchange rate will initially increase in the short run and then decrease in the medium run.
E) none of the above
E
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According to this Application, a common belief is that fiscal multipliers are ________ during ________
A) larger; recessions B) of equal size; recessions and growth periods C) smaller; growth periods D) smaller; recessions
Intel and AMD are a duopoly that produces CPU chips. Intel and AMD can conduct R&D or they cannot conduct R&D. The table above shows the payoff matrix for the two firms
If AMD is playing a tit-for-tat strategy, then if Intel conducted R&D last period, AMD A) definitely conducts R&D this period. B) definitely does not conduct R&D this period. C) might conduct R&D or might not conduct R&D, depending on Intel's profit. D) might conduct R&D or might not conduct R&D, depending on its profit. E) might conduct R&D or might not conduct R&D, but more information is needed to determine its action.
Suppose the cost of milk rose 100 percent from 1990 to 2010, and average prices for the economy rose 133 percent. Relative to others, people who purchased milk experienced a:
A. Lower real income as a result of the price effect. B. Higher real income as a result of the price effect. C. Lower real income as a result of the wealth effect. D. Higher real income as a result of the income effect.
Federal deposit insurance discourages but does not prevent bank runs.
Answer the following statement true (T) or false (F)