Explain why in an economy with fixed exchange rates, monetary policy will not cause expenditure switching
What will be an ideal response?
Expenditure switching refers to switching back and forth between domestic and foreign goods, in this case, in response to a change in the exchange rate. Expenditure switching magnifies the effects of monetary policy when rates are flexible. In an economy with a fixed exchange rate, changes in the money supply will not cause expenditure switching because the exchange rate does not change.
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Is the "international adjustment mechanism" for fixed and flexible exchange rates the same? Discuss briefly
What will be an ideal response?
Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?
A) incentives B) resources C) rationality D) aggregates
Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014 . Harry's 2009 spending in 2014 dollars is about
a. $43,290. b. $37,143. c. $40,950. d. $40,857.
The law of diminishing marginal utility states that
a. total utility falls as more of a good is consumed, other things constant b. total utility falls as marginal utility falls, other things constant c. marginal utility falls as total utility increases, other things constant d. marginal utility falls as more of a good is consumed, other things constant e. marginal utility falls as less of a good is consumed, other things constant