The real exchange rate is the amount of an overseas currency that can be purchased with the local (domestic) currency.
Indicate whether the statement is true or false.
Ans: False.
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If capital inflows decrease due to higher interest rates in other countries and large amounts of import spending, there will be:
A) upward pressure on a country's exchange rate. B) downward pressure on a country's exchange rate. C) no pressure on a country's exchange rate. D) none of the above.
The quantity theory of money assumed
A) that an increase in prices causes a proportionate increases in real GDP. B) a fall in the velocity of money causes a proportionate increase in the money supply. C) a rise in money supply causes a proportionate fall in velocity. D) the fraction of income people desire to hold in the form of money is a constant.
If a person does not have to pay more than $3,000 in a year for health-care expenses, this is called their
A. co-payment. B. lifetime maximum. C. maximum out-of-pocket. D. deductible.
If both Real GDP and the general price level fell following the September 11th terrorist attack,
A. the negative aggregate supply shock was smaller than the negative aggregate demand shock. B. both the aggregate supply shock and the aggregate demand shock must have been, ironically, positive. C. the aggregate supply shock was negative, but the aggregate demand shock must have been positive. D. the negative aggregate supply shock was larger than the negative aggregate demand shock.