What is the difference between the monetary approach to the exchange rate and monetary approach to the balance of payments? Briefly summarize the policy implications of the monetary approach
What will be an ideal response?
With the MABP there are not exchange rate changes so international reserve flows respond to changes in PF, Y, and D. With the MAER, there are no reserve flows so the exchange rate changes in response to changes in PF, Y, and D. Policy implications: BOP disequilibria are monetary phenomena that are transitory and can be handled with domestic monetary policy; an increase in domestic income will improve domestic BOP if not offset by domestic credit increases.
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In the following table, fill in the columns for your return on investment if the price of your house increased or decreased by 40 percent, based on the down payments specified in the first column
Return on Your Investment From Down Payment A 40 Percent Increase in the Price of Your House A 40 Percent Decrease in the Price of Your House 100% 20 10 5
If the imposition of a binding minimum wage results in much higher unemployment among workers seeking minimum wage jobs,
a. firms will respond by demanding more labor. b. those workers who are employed will be worse off than before the minimum wage law. c. labor demand is relatively elastic. d. labor demand is relatively inelastic.
Production technology determines the relationship of total cost to outputs
a. True b. False Indicate whether the statement is true or false
Which of the following is NOT one of the main goals of monetary policy?
A. Controlling inflation B. Ensuring financial stability C. Smoothing out the business cycle D. Balancing the federal budget