Write down the Fisher equation and IRP relationship for the United States and the United Kingdom. Using these relationships, how can we determine the link between interest, inflation, and exchange rates? How can a change in U.S
policy affect this link?
See text for basic relationship. U.S. policy can change the real interest rate or expected inflation in the United States so that the nominal interest rate and exchange rate change.
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The relationship between a change in consumer income and a resulting change in demand for a good is
a. demand elasticity. b. income elasticity of demand. c. cross elasticity of income demand. d. supply elasticity.
When public saving falls by $2b and private saving falls by $1b in a closed economy,
a. investment falls by $1b. b. investment falls by $3b. c. investment increases by $1b. d. investment falls by $2b.
The economic perspective entails:
A. irrational behavior by individuals and institutions. B. a comparison of marginal benefits and marginal costs in decision making. C. short-term but not long-term thinking. D. rejection of the scientific method.
The decision in the U.S. Steel case:
A. reflected a behavioralist approach to antitrust. B. reflected a structuralist approach to antitrust. C. divided U.S. Steel into a number of smaller companies. D. ruled that U.S. Steel had engaged in illegal price-fixing.