To what extent can monetary policy be used to affect output in a fixed exchange rate regime? Explain
What will be an ideal response?
It cannot. To peg the exchange rate, the central bank must keep the domestic interest rate equal to the exogenous foreign interest rate. The domestic central bank cannot independently change its interest rate.
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Refer to the figure above. Which of the following statements is true?
A) Ryan has a comparative advantage in the production of Good 1, whereas Tom has a comparative advantage in the production of Good 2. B) Ryan has a comparative advantage in the production of Good 2, whereas Tom has a comparative advantage in the production of Good 1. C) Ryan has a comparative advantage in the production of both the goods. D) Tom has a comparative advantage in the production of both the goods.
The long run demand curve for wheat is likely to be: a. more elastic than the short run demand curve for wheat. b. more inelastic the short run demand curve for wheat. c. the same as the short run demand curve for wheat
d. more inelastic than the short run supply of wheat.
Which of the following are goals for monetary policy?
A. Controlling rents B. Preventing boom and bust cycles in the economy C. Controlling world oil prices D. Monitoring corruption in the securities industry
If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:
A. optional. B. progressive. C. proportional. D. regressive