Are foreign exchange market interventions the only tool available to a central bank to change the exchange rate? Explain.
What will be an ideal response?
No, any central bank policy that influences the domestic interest rate will affect the exchange rate. The changes in the domestic interest rate, relative to the interest rates in other countries, will alter the demand for domestic assets, which will then cause the demand for and supply of the domestic currency to change. As the demand and supply for domestic currency changes, the exchange rate will change.
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Suppose you have $400 and the inflation rate is 4 percent. In order to earn a real return of $20 on your investment, the nominal interest rate must be
A) 1 percent. B) 5 percent. C) 9 percent. D) 12 percent.
A currency appreciation reduces aggregate demand and increases aggregate supply
a. True b. False Indicate whether the statement is true or false
Medicare covers all those
A. who are both young and poor. B. unable to pay its premiums. C. over 65. D. eligible for Social Security benefits.
How does a fall in the money wage rate affect the aggregate supply curve?
What will be an ideal response?