Refer to the graph shown. To maintain the price of euros at $1.00, the government must:
A. sell Q2 - Q0 euros.
B. buy Q1 - Q2 euros.
C. buy Q1 - Q0 euros.
D. do nothing.
Answer: D
You might also like to view...
A good proxy for the flow of consumption services would be
A) aggregate consumption. B) consumption of services and consumption of durables. C) consumption of durables and consumption of nondurables. D) consumption of nondurables and consumption of services.
According to the kinked demand theory, when one firm raises its price, other firms will:
a. also raise their prices. b. refuse to follow. c. increase their advertising expenditures. d. exit the industry.
Which of the following is an example of expansionary fiscal policy?
A. Increase taxes. B. Decrease government spending. C. Increase government spending. D. Increase taxes and decrease government spending equally.
According to the new classical theory, economic policies are effective
A. only if they are formed with rational expectations. B. only if they are unanticipated. C. only if they are expansionary in nature. D. only if they are anticipated.