What are the economic effects of a currency depreciation?
A. It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well.
B. It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well.
C. It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise, and output may rise as well.
D. It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall, and output may fall as well.
Answer: C
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One important reason why the United States government is not likely to go bankrupt even with a large public debt is that it has
A. the ability to decrease interest rates and increase investment spending. B. the capacity to pay off its outstanding debt with gold. C. a strong military to protect it from creditors. D. the power to print money to finance the debt.
In the above figure, the price paid by the buyer before the tax is ________ per compact disc, and the price paid by the buyer after the tax is ________ per compact disc
A) $20; $20 B) $20; $30 C) $30; $20 D) $30; $30
Explain why a production quota is inefficient
What will be an ideal response?
Under a fixed exchange rate system, if an appreciation in the value of a country's currency develops, the monetary authorities ________
A) will gain international reserves B) buy the domestic currency in foreign exchange markets C) sell foreign exchange in foreign exchange markets D) will lose international reserves