Refer to Figure 19-10. Under the Bretton Woods System of exchange rates, if the par exchange rate was $2 per pound in the figure above, and equilibrium persisted at $3, then a revaluation of the currency would have
A) led to a balance of trade surplus.
B) increased the price of imports to Britain.
C) led to a current account surplus.
D) increased the price of British exports to the United States.
D
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In the above figure, new expectations of booming business conditions and a higher expected profit will
A) shift the demand for loanable funds curve leftward. B) shift the demand for loanable funds curve rightward. C) have no effect on the demand for loanable funds curve. D) make the demand for loanable funds curve become horizontal.
If the ratio of net worth to vault cash is .2, the prime rate is .05, and the required reserve ratio is .25, the demand deposit expansion multiplier is
A) 2. B) 4. C) 5. D) .25.
A perfectly competitive firm is maximizing profits in the short run. This implies that the firm is earning the most economic profits possible, which
A. must be positive. B. exist at the point at which price equals total cost. C. must be either zero or positive. D. can be positive, negative, or zero.
Why did some of the formerly Communist countries of Eastern Europe have inflation rates over 100%, while others didn't? Which factor was more important in explaining the differing inflation rates, real money demand or nominal money supply? Why did the countries with high inflation rates allow inflation to get so high?
What will be an ideal response?