Using a figure describing both the U.S. money market and the foreign exchange market, analyze the effects of an increase in the U.S. money supply on the dollar/euro exchange rate
What will be an ideal response?
An increase in the U.S. money supply will cause interest rate to decrease. This should increase investment and possibly consumption of durable goods. The reduction in the interest rate will cause a movement to the left along the schedule depicting the expected euro return expressed in dollar. The result is an increase in E or a depreciation of the dollar.
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A player has a dominant strategy when:
A) her chosen strategy gives her a lower payoff than the other player. B) her chosen strategy matches the best response of other players in the game. C) she has many best responses to any strategy of the other player in the game. D) she has only one best response to every possible strategy of the other player.
Refer to the scenario above. What is the present value of $3,400 to be received after five years?
A) $2,300.78 B) $2,540.68 C) $3,200.22 D) $3,526.44
Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza
A) ice cream is a normal good and hot fudge is an inferior good. B) ice cream and hot fudge and substitutes. C) ice cream and hot fudge are normal goods. D) ice cream and hot fudge are complements.
________ spending follows a smooth trend whereas, ________ spending is more volatile and subject to fluctuations
A) Government; consumer B) Consumer; government C) Consumer; investment D) Investment; consumer