Assume the exchange rate of the domestic currency is overvalued. What does the central bank need to do in order to keep the exchange rate fixed?
a. There is no need to intervene since the domestic currency is not undervalued.
b. It needs to increase the money supply by raising the discount rate.
c. It needs to sell the excess demand for foreign currency.
d. It needs to buy the excess supply of foreign currency.
e. It needs to decrease the money supply by lowering the discount rate.
.C
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Explain how the following factors will shift the demand curve for Gillette shaving cream
a. The price of a competitor's shaving cream increases. b. With an increase in unemployment, the average level of income in the economy falls. c. Shaving gels and foams, marketed as being better than shaving creams, are introduced in the market.
Purchasing power parity suggests that
a. Given fixed prices, interest rates adjust so that a good costs the same across two countries b. Given fixed exchange rates, prices adjust such that a good costs the same across two countries c. All of the above d. None of the above
In 2015, the labor force participation rate was 62.6 percent. This means that:
A. 62.6 % of all working age people wanted a job. B. there was 37.4 % unemployment. C. 62.6 % of all working age people were employed. D. only 62.4 percent of labor force was in working age population.
Assume Willow's income to spend on either earrings or hairbands is $24. If her budget constraint is pictured in the graph shown, which of the following must be true?
A. Willow will buy more earrings than hairbands because they are less expensive. B. Hairbands must cost $3, and earrings must cost $6. C. Hairbands must cost $8, and earrings must cost $4. D. Willow will buy more hairbands than earrings because they are less expensive.