If purchasing-power parity holds, when a country's central bank decreases the money supply, its
a. price level rises and its currency appreciates relative to other currencies in the world.
b. price level falls and its currency appreciates relative to other currencies in the world.
c. price level rises and its currency depreciates relative to other currencies in the world.
d. price level falls and its currency depreciates relative to other currencies in the world.
b
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If the current account balance is -$100 billion, net interest = $0, net transfers = $0, then
A) the country is loaning abroad. B) there was an increase in net foreign assets. C) exports are greater than imports. D) the capital and financial account balance must be +$100 billion. E) imports are greater than exports.
Suppose potential GDP is $100 billion and the natural unemployment rate is 5 percent. If the unemployment rate is 6 percent, then according to Okun's Law real GDP is
A) $102 billion. B) $98 billion. C) $101 billion. D) $99 billion. E) $100 billion.
The figure above shows depicts the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the firm
A) would definitely shut down. B) would incur an economic loss. C) would increase its price. D) has total costs less than $2,720.
The mechanism behind the inflation insulation provided by a floating exchange rate is
A) Purchasing Power Parity. B) a fixed AA curve. C) market speculation. D) tight monetary policy. E) symmetry.