Explain why (holding interest rates constant), a rise in the expected depreciation in a country's currency leads to depreciation of that currency today
What will be an ideal response?
A rise in the expected depreciation rate of the dollar raises the expected dollar return on euro deposits. Now, there are excess supply of dollar deposits (euro deposits offer higher expected rate of return than do dollar deposits). The dollar must depreciate to remove this excess supply.
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A firm uses workers, land, and machinery for its production process. Which of the following statements is then true?
A) The only way the firm can change its output level in the long run is by changing the number of workers. B) The only way the firm can change its output level in the long run is by changing the amount of land it owns. C) The only way the firm can change its output level in the long run is by changing the amount of machinery. D) The firm can change its output level in the long run by changing any or all of its three inputs.
According to the classical dichotomy, which of the following is not influenced by monetary factors?
a. the price level b. real GDP c. nominal interest rates d. All of the above are correct.
Which of the following is an income number?
A. M1 B. M2 C. GDP D. Cash
From November 1993 to December 1994, the Democratic Republic of the Congo experienced an inflation rate of 69,502 percent. This economic condition would best be described as:
A. cost-push inflation. B. hyperinflation. C. anticipated inflation. D. a cost-of-living adjustment.