Economists who really do want to take discretion away from the Fed, by imposing rules on ________, face the problem of ________
A) policy instruments, the Fed requiring discretion to adhere to the rule
B) policy instruments, slippages between instruments and target variables
C) target variables, the Fed requiring discretion on how to achieve the rule
D) target variables, slippages between instruments and target variables
B
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Holding all else constant, a decrease in the real interest rate on Mexican assets will ________ the supply of dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. increase; decrease B. decrease; increase C. increase; increase D. decrease; decrease
In June 2008, $1 bought 104 yen and in October, $1 bought 93 yen. This change means
A) U.S. exports became more expensive for Japanese buyers. B) there will be a movement down along the demand curve for dollars. C) there was an increase in the value in the dollar, relative to the yen. D) the dollar appreciated relative to the yen.
A benevolent social planner would prefer that the output of good x be increased from its current level if, at the current level of output of good x,
a. social value = private value = private cost < social cost. b. social cost > private value = social value > private cost. c. social cost = private cost = private value < social value. d. social value = private cost = social cost > private value.
The three main monetary policy instruments are
A. the money supply, the market interest rate, deposit insurance B. open market operations, reserve requirement ratio, the discount rate C. open market operations, deposit insurance, the money supply D. open market operations, reserve requirement ratio, the market interest rate