A krone/euro peg alone is
A) not enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule.
B) enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule.
C) not enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule, provided fiscal policy will be used as well.
D) enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule, provided the government runs a budget deficit.
E) enough to provide partial stability in the face of smaller monetary shocks that shift the AA schedule.
B
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
The exchange rate is the ________.
A. market on which currencies of various nations are traded for one another B. rate at which two currencies can be traded for each other C. quantity of foreign currency assets held by a government for the purpose of purchasing the domestic currency in the foreign exchange market D. price of the average domestic good or service relative to the price of the average foreign good or service, when prices are expressed in terms of a common currency
Explain what is meant by the term "monetizing the deficit."
What will be an ideal response?
Using the figure above, which of the following statements are correct?
i. When 3 haircuts are produced, the firm's ATC is $10. ii. If the firm charges each customer the same price for a haircut, the price of a haircut is $14. iii. The firm is NOT a perfect competitor. A) i only B) ii only C) i and ii D) i and iii E) i, ii, and iii