Suppose that at the prevailing euro-dollar exchange rate there is an excess demand for dollars. To stabilize exchange rates, the United States might
A. Raise interest rates.
B. Raise taxes.
C. Reduce government spending.
D. Decrease trade restrictions on euro-priced goods.
Answer: D
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As an economist working for a U.S. government agency you determine that a particular country has a sacrifice ratio of 3 . Policy-makers in that country are thinking of lowering the inflation rate from 10% to 4%. Is this sacrifice ratio higher or lower than the typical estimate? From your numbers, what is the amount of output that will be lost for this country to reduce its inflation rate?
a. The sacrifice ratio is higher than the typical estimate. It will cost 30% of annual output to reach the new inflation target. b. The sacrifice ratio is higher than the typical estimate. It will cost 18% of annual output to reach the new inflation target. c. The sacrifice ratio is lower than the typical estimate. It will cost 30% of annual output to reach the new inflation target. d. The sacrifice ratio is lower than the typical estimate. It will cost 18% of annual output to reach the new inflation target.
Which of the following is an accurate statement about economic models?
a. Economists use only three models. b. Models should include as many detailed facts as possible. c. There is one correct model that should be used for all economic tests. d. Models should vary depending on how they will be used.
It is profitable to hire labor so long as the:
A. MPL is less than wage. B. VMPL is less than wage. C. VMPL is greater than wage. D. MPL is greater than wage.
If we are comparing the price of regular gasoline with the price of super gasoline, then an increase in the relative price of regular gasoline implies that
A. the relative price of super gasoline decreased. B. the nominal price of super gasoline decreased. C. the relative price of regular gasoline increased. D. the nominal price of regular gasoline increased.