If U.S. interest rates rise while foreign interest rates remain unchanged,
a. GDP will not change since the shift in aggregate supply cancels the positive effects on aggregate demand.
b. the dollar will depreciate and thus reduce prices and output.
c. foreign capital will be attracted to the United States and the dollar will appreciate.
d. net exports will increase and the economy will expand.
c
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Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one pound of cheese is ________ car(s).
A. 1/500 B. 500 C. 1/250 D. 1/10
How can we explain the effect of a proportional tax on the multiplier?
What will be an ideal response?
Export demand shocks are likely to be least disruptive to a country with
A. a fixed exchange-rate system with sterilization. B. a fixed exchange-rate system without sterilization. C. a floating exchange-rate system. D. a deficit in the current account.
According to Taylor's rule, all of the following variables help explain the behavior of the federal funds rate EXCEPT
A) output gap. B) current inflation. C) inflation gap. D) yield curve.