Refer to the graph shown. A decrease in aggregate demand in the short run is likely to cause a movement from:
A. B to A.
B. B to D.
C. C to D.
D. C to A.
Answer: D
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Explain and demonstrate graphically how targeting nonborrowed reserves can result in federal funds rate instability
What will be an ideal response?
If a developing country has sufficient reserves, the buying and selling of foreign currency by the central bank is:
A. likely to have a much smaller impact on the exchange rate than in developed countries. B. completely ineffective on the exchange rate. C. likely to have a much greater impact on the exchange rate than in developed countries. D. likely to have roughly the same impact on the exchange rate as in developed countries.
Which one of the following statements is NOT correct?
A. The natural rate of unemployment is estimated to be between 5 percent and 6.5 percent in the U.S. B. The term "full employment" means that 100 percent of the labor force is employed. C. The line between frictional and structural unemployment is sometimes hard to draw. D. Unemployment can occur even when an economy is growing.
Under a fixed exchange rate system, a government is at risk of running out of foreign currency reserves when the country's imports continue to exceed its exports
Indicate whether the statement is true or false