An increase in the money supply by the Federal Reserve is likely to increase
I. net exports.
II. the exchange rate.
III. interest rates.
IV. aggregate demand.
A) I, II, III, and IV
B) I, II, and IV
C) I, III, and IV
D) I and IV
Ans: D) I and IV
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When comparing the velocity of M2 (V2), with the velocity of M1 (V1), the evidence suggests that V2 has been __________ and V1 has been __________ over time
A) relatively predictable; relatively predictable B) relatively predictable; relatively unpredictable C) relatively unpredictable; relatively predictable D) relatively unpredictable; relatively unpredictable
Public policy towards externalities becomes important when _____
a. transactions costs are zero b. transactions costs are low c. transactions case are high d. there is no relationship between transactions costs and externalities
If an individual's supply of labor curve is positively sloped throughout, then:
a. the substitution effect always dominates the income effect. b. the income effect always dominates the substitution effect. c. the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels. d. the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.
Network externalities
a. explain why switching costs fall as the size of a network increases b. are the service-industry equivalent of natural monopolies in goods-producing industries c. are more important in the short run than in the long run d. help explain why monopolies often do not last for very long e. can explain the dominance of existing firms in some industries