At a given nominal rate of interest, when spending is equal to output and there is uncovered interest parity, we have:
A) real exchange rate parity.
B) equilibrium in the goods market and in the forex market.
C) stable inflation and low unemployment.
D) depreciation of the home currency.
Ans: B) equilibrium in the goods market and in the forex market.
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When a society's economic institutions provide secure property rights, set up a judicial system that enforces contracts and upholds the law, allow private parties to sign contracts for economic and financial transactions, and maintain relatively free
entry into different businesses and occupations, the institutions in the society can be said to be: A) inclusive. B) extractive. C) exogenous. D) exclusive.
When government inefficiencies exist
A) a country tends to grow at a slower rate. B) a country tends to grow at a faster rate. C) economic growth is not influenced. D) dead capital is usually not a problem.
Suppose the market demand function for ice cream is Qd = 10 - 2P and the market supply function for ice cream is Qs = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream. The producer surplus after the tax is:
A. $3.56 million. B. $4.50 million. C. $1.89 million. D. $7.11 million.
Economists tell stories
a. in order to breathe life into economic theory and personalize abstract ideas b. because economics is an art, not a science c. as a way of rigorously testing economic theory d. because doing so is a required part of the scientific method e. to show how their theory can predict at least one real-world situation