Using a figure describing both the U.S. money market and the foreign exchange market, analyze the effects of a temporary increase in the European money supply on the dollar/euro exchange rate
What will be an ideal response?
An increase in the European money supply will reduce the interest rate on the euro and thus will cause the schedule of the expected euro return expresses in dollars to shift down, causing a reduction in the dollar/euro exchange rate, i.e., an appreciation of the U.S. Dollar. The euro depreciates against the dollar. The U.S. money demand and money supply are not going to be affected, and thus the interest rate in the U.S. will remain the same.
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The following are the equations for the supply and demand curves in the market for weezils: Demand: Qd= 20?2P Supply: Qs= 5 + 3P where Qdis the quantity demanded, Qsis the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, when the market is in Equilibrium, how many weezils are sold?
A. 3 B. 5 C. 11 D. 14
What is meant by the term "exclusive dealing"? Give an example of an exclusive deal. When is it illegal?
What will be an ideal response?
Until the year 2000, the Humphrey-Hawkins Act directed the Fed to pursue all of the following, except
A) maximum employment. B) price stability. C) high economic growth. D) moderate long-term interest rates.
The aggregate demand curve
A) is like individual demand curves in that prices of other goods are held constant. B) is like individual demand curves in that income is constant. C) differs from individual demand curves in that the aggregate demand curve is not downward sloping. D) differs from individual demand curves in that the aggregate demand curve looks at the entire circular flow of income and product while the individual demand curve looks at only one good.