Assume that the fixed exchange rate system of 1.1 euros = 1 dollar is below the equilibrium exchange rate of 1.3 euros = 1 dollar in a flexible exchange rate system. Then, at the fixed exchange rate, the dollar would be
a. undervalued and the euro would be overvalued.
b. overvalued and the euro would be undervalued.
c. revalued and the euro would be devalued.
d. depreciated and the euro would be appreciated.
A
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Monetary policy refers to the government's
A) decisions on how much money to spend. B) decisions on how much money to collect in taxes. C) plans for retiring the national debt. D) management of the money supply and interest rates to achieve macroeconomic objectives.
Why might economists prefer private ownership of monopolies over public ownership of monopolies?
The money supply is 1,500 of which 500 is currency held by the public. Bank reserves are 200. The existing reserve/deposit ratio equals:
A. 0.15 B. 0.20 C. 0.10 D. 0.05
If the demand for air travel were to change so that business travelers and vacationers have the same price elasticity of demand for air travel,
A) airlines would charge the same price to each type of flyer. B) airlines would still charge business flyers a higher fare since the traveler's employer pays anyway. C) airlines would be driven out of business. D) airlines would counter by charging vacationers a higher fare.