The most important single factor in determining the exchange rate in the short run is
A. inflation differentials.
B. interest rate differentials.
C. monetary growth differentials.
D. price differentials.
Answer: B
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A perfectly competitive firm will be willing to produce even at a loss in the short run, as long as
A. the loss is smaller than its total variable costs. B. the loss is smaller than its marginal costs. C. price exceeds marginal costs. D. the loss is smaller than its total fixed costs.
If you take out a bank loan prior to unanticipated inflation
A) your bank will gain at your expense. B) you will gain at the expense of your bank. C) it will be harder for you to repay the loan because of the inflated dollar. D) neither you nor your bank will be affected, because the loan was made prior to the inflation.
Commitment strategies:
A. are not necessary to reach a mutually beneficial equilibrium in repeated games. B. usually fail to work. C. are always needed to reach a mutually beneficial equilibrium in single-round games. D. are not observed in reality.
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.