If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output.
B. lower price level and lower level of output.
C. higher price level and higher level of output.
D. lower price level and higher level of output.
Answer: A
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Currency traders expect the dollar to appreciate. What impact will this have on equilibrium in the foreign exchange market?
A) The dollar will appreciate, and the equilibrium quantity of dollars will increase. B) The dollar will appreciate, and the equilibrium quantity of dollars will decrease. C) The dollar will depreciate, and the equilibrium quantity of dollars exchanged will decrease. D) The dollar will appreciate, and the change in the equilibrium quantity of dollars exchanged cannot be determined.
How do capital markets fit the general tendency toward ‘globalization'?
What will be an ideal response?
If the required reserve ratio is 15 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the M1 money multiplier is
A) 2.5. B) 1.67. C) 2.3. D) 0.651.
In the Mundell-Fleming model, regardless of whether the economy has perfect capital mobility or not, an increase in the money supply
a. reduces interest rates . b. increases income. c. decreases the trade balance. d. increases capital inflows.