Under a fixed exchange rate system, a real interest rate corresponding to the upward-sloping portion of the NCF curve reflects the fact that a central bank ________, and the real interest rate corresponding to the horizontal portion of the NCF curve
reflects the fact that a central bank ________. A) can always supply more domestic currency; can always meet the demand for foreign currency
B) can always supply more domestic currency; is limited in meeting the demand for foreign currency
C) is limited in meeting the demand for domestic currency; can always meet the demand for foreign currency
D) is limited in meeting the demand for domestic currency; is limited in meeting the demand for foreign currency
B
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Using the ISLM model, show graphically and explain the effects of a monetary contraction. What is the effect on the equilibrium interest rate and level of output?
What will be an ideal response?
According to Keynes, it is __________ to have __________ holding money
A) possible; capital gains or losses from B) impossible; capital gains and losses from C) possible; a higher opportunity cost of D) impossible; a lower opportunity cost of
You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?
a. This type of tax is an example of a payback tax. b. Your employer is required by law to pay $400 to match the $400 deducted from your check. c. The $400 that you paid is the true burden of the tax that falls on you, the employee. d. All of the above are correct.
If A and B are complements, an increase in the price of good A would:
A. lead to a decrease in demand for B. B. lead to an increase in demand for B. C. have no effect on the quantity demanded of B. D. none of the statements associated with this question are correct.