The answer is: "A geographic area in which exchange rates can be fixed or a common currency used without sacrificing domestic economic goals." What is the question?
A) What is a flexible exchange rate system?
B) What is a managed float area?
C) What is a purchasing power parity area?
D) What is an optimal currency area?
D
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In the short run,
a. spending determines income, but not the other way around b. income determines spending, but not the other way around c. spending determines the interest rate, but not the other way around d. spending determines income, and income determines spending e. spending determines the productivity, and productivity determines spending.
All of the following determine the price elasticity of demand except
A. the existence of close substitutes. B. a change in the price of resources used to produce the good. C. the proportion of a? person's budget spent on the good. D. the length of the time period.
One problem with using monetary policy to address "bubbles" in asset markets is that:
A. monetary policy is well-suited for addressing the problem of inappropriately high asset prices. B. the Federal Reserve is not interested in stabilizing output. C. doing so presupposes that the Federal Reserve is better than financial-market professionals at identifying bubbles. D. reducing the real interest rate to deal with the bubble could lead to inflation.
To test the theory that if the price of pens rises, then pen purchases fall, an economist would
A. analyze data on the price of pens and the price of pencils without holding other factors constant. B. investigate whether people purchase more pens when their income rises. C. analyze data on pen purchases linked to the price of pens, holding other factors constant. D. ask his or her friends if they would buy fewer pens when the price rises.