During the Chinese experience with pegging the yuan to the dollar, the yuan was undervalued. As a result,
A) the prices of Chinese exports were higher than they would have been without the peg.
B) the equilibrium value of the yuan was below the pegged value of the yuan.
C) there was a surplus of yuan on the market that the Chinese government had to purchase to maintain the peg, depleting China's reserves of dollars.
D) there was a surplus of dollars on the market that the Chinese government had to purchase to maintain the peg.
D
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Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap.
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.
The term “bilateral monopoly” refers to market situations in which
A. there are two participants on the selling side. B. there are two participants on the buying side. C. there is a monopoly on the selling side and a monopsony on the buying side. D. a monopoly has evaded antitrust laws.
Suppose the economy experiences a recessionary gap. Policymakers who believe that the private sector has failed to provide adequately, a host of services that would benefit society would favor which of the following policies to close the gap?
A) subsidies to private firms to spur production B) decreases in income tax rates C) increases in government purchases D) decreases in interest rates