According to the purchasing power parity, if the price level in the US rises relative to Mexico
a. The dollar will appreciate relative to the peso
b. The dollar will depreciate relative to the peso
c. There is no effect on either currency
d. None of the above
b
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What is meant by constant returns to scale?
What will be an ideal response?
Empirical evidence that changes in monetary policy do not cause rapid price adjustments ________
A) is consistent with the Keynesian emphasis on short-run economic fluctuations B) suggests that policymakers need not worry much about inflation C) remains limited and unconvincing D) is consistent with the classical dichotomy E) none of the above
The banking system creates additional money by making loans equal to total reserves.
Answer the following statement true (T) or false (F)
For a given short-run Phillips curve, if expected inflation is 8% but actual inflation is 10%, is the unemployment rate above or below its natural rate?