The long boom occurred in the
A. 1940s and 1950s.
B. 1980s and 1990s.
C. 1920s and 1930s.
D. 1960s and 1970s.
Answer: B
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The demand for a product produced by a union becomes more elastic. After this change, how does an increase in the wage rate paid its members affect their employment?
A) It does not decrease employment at all. B) It decreases employment by less than it would have before. C) It decreases employment by more than it would have before. D) It increases employment.
Because the value of the euro is determined by factors that affect the entire euro zone, during the recession of 2007-2009, individual countries using the euro
A) were able to use expansionary monetary policy to lessen the impact of the recession. B) were unable to have their exchange rates depreciate. C) were more insulated from unemployment increases than most countries. D) experienced a greater increase in exports than did most countries.
Use the standard IS-LM-FE framework and assume the country begins at a triple intersection. Show using the graph and explain in words the effect that an increase in the country's money supply will have on domestic interest rates, output levels, and the official settlements balance (before we consider the implications of pressure on the country's exchange rate).
What will be an ideal response?
Suppose there are two countries (country A and country B) each with its own currency (Currency A and Currency B). Suppose the exchange rate is expressed in terms of amount of Currency A needed to get Currency B. A strengthening of Currency A would show up as
A. an increase in the interest rate. B. an increase in the exchange rate. C. a decrease in the exchange rate. D. a decrease in the interest rate.