Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. Now suppose that the increase in the price of oil in the second half of 2007 causes the IS curve in the United States to shift to the left. If all other things remain unchanged, what will happen to U.S. interest rates?
A) They will rise.
B) They will fall.
C) They will not change.
D) They will rise dramatically.
Ans: B) They will fall.
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Social Security wealth is the future value of the Social Security system.
A. True B. False C. Uncertain
We translate nominal income in any past year into constant, real dollars to:
A. allow us to compare changes in purchasing power over time. B. see what an income we were earning in the past would be equivalent to today. C. understand what a salary in the past would equal in current dollars to determine how much more we have actually gained in purchasing power. D. All of these statements are true.
In each of the following scenarios, explain why the euro will appreciate or depreciate in a system of floating exchange rates. A) A recession in Germany cuts German purchases of American goods. B) American investors are attracted by prospects for profit on the Frankfurt Stock Exchange. C) Interest rates on government bonds rise in the U.S. but remain stable in Germany
Every economy must ration goods in some way because of
a. overpopulation. b. poorly-performing markets. c. the income gap between rich and poor. d. scarcity.