Explain the following figure
What will be an ideal response?
The figure explains how the money markets of two countries are linked through the foreign exchange market. The monetary policy actions by the Fed affect the U.S. interest rate, changing the dollar/euro exchange rate that clears the foreign exchange market. The European System of Central Banks (ESCB) can affect the exchange rate by changing the European money supply and interest rate.
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Which of the following shifts the supply curve rightward?
A) an increase in the population B) a positive change in preferences for the good C) a decrease in the price of the good D) a decrease in the price of a factor of production used to produce the good
If the consumption of Good A by one person does not decrease the quantity of Good A available for another person's consumption, then the good is said to be
A) nonrival. B) rival. C) nonexcludable. D) excludable.
Assume there is an improvement in the technology used to produce Blu-ray disc players. What could be expected to happen to the equilibrium price and quantity in the market for Blu-ray disc players?
A) Equilibrium price would increase and equilibrium quantity would decrease. B) Equilibrium price and quantity would both decrease. C) Equilibrium price would decrease and equilibrium quantity would increase. D) Equilibrium price and quantity would both increase.
The maximum increase in the money supply possible from a deposit of $D into the banking system where R is the reserve requirement is
A. (1 / R)(D? R). B. R× D. C. (1 / R)(1 ? R)D. D. (1 / R)D.