In many countries, an exchange-rate peg substitutes for ________
A) speculative attacks
B) an export-oriented sector
C) discretionary monetary policy
D) capital controls
C
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Suppose a retail store was offering 10% off list prices on all goods. The benefit of the 10% savings is:
A. unrelated to the list price of the good. B. zero since costs and benefits shouldn't be measured proportionally. C. positively related to the list price of the good. D. negatively related to the list price of the good.
According to Monetarists, a direct substitution between cash balances and real goods results from a change in
A) investment spending. B) consumption spending. C) government spending. D) the money supply.
If higher inflation ensues from a temporary negative supply shock, and in response, the central bank raises interest rates, then ________
A) it is likely adopting a policy to stabilize inflation in the short run B) short-run inflation will fluctuate around (first go higher then go lower than) the long run level of inflation C) it will need to lower interest rates back to their original values to ensure that inflation returns to its original rate D) all of the above E) none of the above
In its original form, the Phillips curve depicted a situation in which an economy could reduce its unemployment rate by holding the inflation rate steady
a. True b. False Indicate whether the statement is true or false