Assume a country is in a fixed exchange rate regime. Now suppose that individuals expect that policy makers will revalue its currency. Explain the various actions that policy makers can choose in response to this expected revaluation
What will be an ideal response?
Policy makers can attempt to persuade (via official announcements) that they remain committed to pegging the currency at its current rate. Second, they may have to reduce domestic interest rates to prevent any appreciation of the currency. Eventually, they may be forced to revalue because of the expansionary effects of the lower i.
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The US government began tracking poverty in the late:
A. 1950s. B. 1960s. C. 1970s. D. 1940s.
Most economists today believe that the Phillips curve is
a. vertical in the short run but downward sloping in the long run. b. upward sloping in the short run but vertical in the long run. c. downward sloping in the short run but vertical in the long run. d. vertical in the short run but upward sloping in the long run.
For a government, the appropriate Keynesian response to a recessionary gap is to increase government spending
a. True b. False Indicate whether the statement is true or false
A farmer has many competitors and exists in a market structure known as perfect competition. This means that price is determined outside of the individual farmer's ability to charge a price higher than the going market for a bushel of wheat, hence the farmer is
A. a price maker and can therefore charge different customers different prices. B. never able to sell anything for any prices he charges. C. a price taker and cannot affect the market price of wheat. D. always able to price produce above the competition and earn a larger profit.