In the open economy macroeconomic model, the price that balances supply and demand in the market for foreign-currency exchange model is the
a. nominal exchange rate.
b. nominal interest rate.
c. real exchange rate.
d. real interest rate.
c
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Risk Premium refers to
A) the average difference over a long period of the interest rate on long-term bonds and the interest rate on the short-term federal funds rate. B) the average difference over a long period of the interest rate on short-term financial instruments and the interest rate on the discount rates. C) the difference between the corporate bond rate and the risk-free rate of Treasury bonds. D) the difference between prime rate and the discount rate.
Suppose real output falls in the aggregate economy. Which is correct?
A) A real business cycle theorist thinks that there was a negative shock to total factor productivity, and that the government should therefore increase expenditures. B) A New Keynesian thinks that the output gap has fallen, and central bank's interest rate target should rise. C) A real business cycle theorist thinks that total factor productivity has risen, and that the government should do nothing . D) none of the above.
If the money supply equals 2,000, velocity equals 3, and real GDP equals 4,000, then the price level equals:
A. 6,000. B. 2. C. 3. D. 1.5.
The firm's short-run marginal-cost curve is increasing when:
A. Marginal product is increasing B. Marginal product is decreasing C. Total fixed cost is increasing D. Average fixed cost is decreasing