Which of the following situations will cause the demand for U.S. dollars to rise in the foreign exchange market?
a. The price level in the United States rises faster than the price level in the United Kingdom.
b. The interest rate in the United Kingdom falls while the interest rate in the United States remains constant.
c. The real GDP in the United States grows while the real GDP in the United Kingdom remains constant.
d. The tax rate in the United States rises while the tax rate in the United Kingdom does not change.
.B
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Precautionary demand for money will fall when
A) the interest rate rises. B) the interest rate falls. C) the money supply increases. D) government spending falls.
Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke) rose sharply in the late 1980s. Under these circumstances, the increase in the price of Coke occurs as a result of a(n): a. decrease in supply. b. decrease in demand. c. increase in supply
d. increase in demand.
Which of the following would cause prices to rise and real GDP to fall in the short run?
a. an increase in the expected price level. b. an increase in the capital stock. c. an increase in the money supply. d. an increase in taxes.
Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?
A. An increase in supply. B. An increase in demand. C. A decrease in supply. D. A decrease in demand.