What was the Bretton Woods agreement about? Why did it break down? Briefly explain
What will be an ideal response?
Established an international monetary system with an adjustable peg exchange rate. Countries that followed divergent policies were to adjust their exchange rate. Too often, exchange rate adjustments were postponed, encouraging large-scale speculative flows of money. It became obvious that nations were unwilling to follow similar monetary policies required to maintain fixed exchange rates.
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If the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is
a. -4 percent. b. 3 percent. c. 4 percent. d. 8 percent.
Aggregate demand is the total demand for the final goods and services produced in an economy.
Answer the following statement true (T) or false (F)
If the Fed increases the discount rate, it is pursuing
A) a contractionary policy because it will be more costly for banks to borrow funds and this puts upward pressure on interest rates in the economy. B) a contractionary policy because it reduces banks' profit margins by raising the cost of borrowing and lowering the return on lending. C) an expansionary policy because it raises the cost of holding excess reserves in the banking system. D) an expansionary policy because it increases bank profits by putting upward pressure on the interest rates that banks can charge on its loans
European nations are currently deregulating many markets. They are expecting:
A. the price of goods sold in these markets to increase. B. the quality of goods sold in these markets to decrease. C. the price of goods sold in these markets to decrease. D. the profits of firms selling in these markets to increase.