Explain why after, say Norway unilaterally pegs the krone to the euro, domestic money market disturbances will no longer affect domestic output despite the continuation of float-rate regime against non-euro currencies
What will be an ideal response?
Because Norway's interest rate must equal the euro interest rate, any pure shifts in the AA curve (see chapter 19 ) will result in immediate reserve inflows or outflows that leave Norway's interest rate unchanged.
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The more a nation depends on imported raw materials, the ________ closely linked is its marginal cost to its nominal aggregate demand, thus the ________ for the typical firm is a policy of indexing price to nominal aggregate demand
A) more, riskier B) more, safer C) less, riskier D) less, safer
If product price increases, then:
a. MP will increase. b. MFC will increase. c. MRP will increase. d. MP will decrease.
According to public choice theory, why might government policy benefit only a narrow interest group?
a. If the benefits to the narrow interest group are relatively large, they have an incentive to invest a lot of money and effort in lobbying government. b. If the costs of this policy are spread out among the general population, and are a very small burden for anyone person, then those paying the costs have little incentive to organize opposition. c. Both a. and b. are correct. d. None of the above is correct.
If the supply of oranges is unit elastic, the price elasticity of supply of oranges is
A. 1.0. B. 0.0. C. -1.0. D. -100.0.