In what sense is "austerity" an inevitable result of structural adjustment?
What will be an ideal response?
Adjustment brings expenditure reduction and expenditure switching. Expenditure reduction means that government programs are likely to be cut back. Expenditure switching moves resources from production of domestic goods to production of goods for export. Both local demand and supply will drop, causing higher unemployment and lower incomes. Devaluation may also bring inflation, cutting into real incomes.
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The euro is said to be selling at a ________ if the spot dollar price is $1.18 and the nine-month forward rate is $1.16
A) forward discount B) forward premium C) forward spread D) none of the above
The short-run aggregate supply curve in modern Keynesian analysis
A) is a horizontal line the same as in the Keynesian model. B) is a vertical line the same as in the classical model. C) is an upward sloping curve. D) is a negatively sloped curve.
Quantitative easing involves policies that are designed to:
A. directly increase the money supply by a certain amount. B. indirectly increase the money supply by decreasing interest rates. C. directly increase aggregate demand through increased government spending. D. indirectly increase aggregate demand through decreased taxes.
If nominal GDP is 2700 and the money supply is 900, what is velocity?
a. 25 b. 13.5 c. 3 d. 0.33