Exchange rates should change whenever a nation's:
a. Relative expectations change.
b. Relative income changes.
c. Relative interest rates change.
d. Relative price level changes.
e. All of the above are true.
.E
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If an undervalued currency is allowed to float:
A) its value will depreciate. B) its quantity supplied in exchange for the other currency will decrease. C) its quantity demanded in exchange for the other currency will increase. D) its value will appreciate.
An increase in real GDP will shift the money demand curve to the ________, causing the nominal interest rate to ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
Jewelers are willing to hold large inventories of diamonds
a. because the demand for diamonds is large and growing b. because that minimizes the fixed cost of producing diamond jewelry c. because, given monopoly control of the market for diamonds, they are confident that the price of diamonds will not plummet rapidly d. because, given monopoly control of the market for diamonds, they are confident that the price of diamonds will rise rapidly e. because that is what their customers expect them to do
The efficiency of the payments' mechanism affects
a. the speed with which money can be exchanged for other assets. b. how quickly individual loan applications will be approved. c. how slowly individuals deplete their cash balances. d. the speed with which financial institutions can process checks and other funds.