To arrive at a complete theory of exchange rate determination, we use:
a. the short-run monetary approach, the long-run monetary approach, and a good dose of common sense.
b. the short-run asset approach, the long-run monetary approach, and real interest parity.
c. real-world phenomena such as sticky prices, government inefficiency, and imperfect markets.
d. information on financial markets, political realities, and the large government debt.
Ans: b. the short-run asset approach, the long-run monetary approach, and real interest parity.
You might also like to view...
Answer the next question using the following budget information for a hypothetical economy. All data are in billions of dollars. Also assume that all budget surpluses are used to pay down the public debt. Government SpendingTax RevenuesGDPYear 1$800$825$4,000Year 28508504,200Year 39008754,350Year 49509004,500Year 51,0009254,600Assume that year 1 is the first year for this economy and year 5 is the current year. What is the public debt in this economy at year 5?
A. $75 billion B. $25 billion C. $925 billion D. $125 billion
If major traders believe the price of a stock should be higher than its current market price,
A) they have an incentive to sell the stock. B) their actions will result in the information they possess being incorporated into the price of the stock. C) there is little they can do because government regulation precludes their acting on what they know. D) they should petition the Securities and Exchange Commission to authorize an adjustment in the price of the stock.
In the classical model, a basic theoretical feature of self-regulating markets was that
a. unsold inventory and labor unemployment would cause prices and wages to increase. b. lower wages and prices would eliminate unemployment and unsold inventory. c. unsold inventory would never occur. d. an increase in planned saving would cause an increase in the interest rate and a decrease in investment.
A low-income household is usually who?
a. one person living alone b. a family headed by a single parent c. a family headed by a young single female, poorly educated and not working d. all of the above represent most low income households