Suppose U.S. interest rates fall. This reduction in U.S. interest rates will cause which of the following to occur?
A. an increase in the value (appreciation) of the U.S. dollar
B. an outflow of capital from the United States
C. an inflow of capital to the United States
D. no change in foreign investment in the United States
Answer: B
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An increase in the value of a domestic currency in terms of other currencies is known as
A) an appreciation. B) a depreciation. C) a flexible exchange rate. D) a term not given in the above answers.
An endowment:
A. is the bundle of goods an individual starts out with before trading. B. is the bundle of goods an individual ends up with after trading. C. is the bundle of goods an individual inherits. D. is the bundle of goods and individual donates.
When the overall price level decreases, what is the effect on the economy?
a. There is an increase in the quantity of real GDP that producers are willing and able to supply.
b. Producers are willing and able to supply less real output.
c. Movement occurs along the short-run aggregate supply curve from point A to point B.
d. The short-run aggregate supply curve shifts leftward.
Refer to the graph shown. A policy that cuts government spending would be most appropriate when the economy is at point:
A. A. B. B. C. C. D. D.