In an open economy under flexible exchange rates, expansionary monetary policy that results in an increase in the money supply will always cause
A) an increase in output.
B) an increase in exports.
C) a reduction in the exchange rate, E.
D) all of the above
E) only A and C
D
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Suppose the supply curve for digital cameras shifts to the right. This will cause a relatively large decrease in the price of digital cameras if both demand and supply are inelastic
Indicate whether the statement is true or false
France is capital abundant and Italy is labor abundant. Shoes are labor intensive and wheat is capital intensive
Draw diagrams to illustrate the pre- and post-trade equilibria for each of the two countries including the production points, the consumption points, the international price, and the volumes of exports and imports for each. Be sure to identify which country has comparative advantage in which good. Which factors gain and which lose when trade is opened between the two countries? Explain carefully.
Suppose a person has a discount rate of zero. This implies she
A) places no value on the future. B) places no value on the present. C) values the present and the future equally. D) would not lend money at any positive interest rate.
In the determination of disposable income, transfer payments are treated as if they
a. are the same as taxes. b. did not exist. c. are the opposite of taxes. d. were a constant amount.