A departure from the New Zealand model, in which the central bank implements an inflation target set by the government, the ECB operates according to the German model, in which the central bank:
A) has ceded power to the administration.
B) has authority to set and implement the inflation target.
C) functions only in a technical sense.
D) is replaced by a currency board.
Ans: B) has authority to set and implement the inflation target.
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The traditional definition of a recession is a decline in real GDP lasting for
A) at least one month.
B) at least two consecutive quarters.
C) at least one year.
Other things remaining the same, if the expected future exchange rate rises, the demand curve for U.S. dollars shifts ________ and the supply curve of U.S. dollars shifts ________
A) rightward; rightward B) rightward; leftward C) leftward; rightward D) leftward; leftward
Factories owned by U.S. firms on the Mexican side of the U.S.-Mexico border are:
A. an important source of foreign direct investment in Mexico. B. not an example of foreign direct investment in Mexico. C. troubling for the Mexican government. D. harmful to Mexico's efforts to increase their economic growth.
How does the shape of the aggregate supply curve affect macroeconomic analysis and policy making? Illustrate your answer with the appropriate graphs