Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?
a. the exchange rate falls so foreign residents want to buy more U.S. goods and services
b. the exchange rate falls so foreign residents want to buy fewer U.S. goods and services
c. the exchange rate rises so foreign residents want to buy more U.S. goods and services
d. the exchange rate rises so foreign residents want to buy fewer U.S. goods and services
d
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Suppose the Fed sells a $50,000 U.S. Treasury security to Martha, a member of the public. If Martha writes a check to the Fed in order to buy this security, the money in her checking account will be transferred to
A) the Fed, and now the Fed will have $50,000 more in reserves than it had before. B) her bank, and now her bank will have $50,000 more in reserves than it had before. C) the Fed, and now it is as if the money doesn't exist. D) the Treasury, and now the Treasury will have $50,000 more in reserves than it had before.
If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:
A. it no longer has a central bank. B. banks will begin to hold 100 percent of their deposits in reserves. C. monetary policy must be used to keep the exchange rate's market equilibrium value at its official value. D. it must eliminate its currency from circulation and replace it with the foreign currency.
When the economy fluctuates around its long-run aggregate supply:
A. it is called the business cycle. B. the economy is in a state of chaos. C. the value of currency becomes unstable. D. we must be in a recession.
Hot dogs and hot dog buns are complementary goods. The cross price elasticity between hot dogs and hot dog buns: a. is positive
b. is equal to zero. c. is negative. d. could be any of the above.