As part of the "exchange rate channel of monetary policy," a higher money supply causes a __________ interest rate and thus __________ of the domestic currency
A) higher; appreciation
B) higher; depreciation
C) lower; appreciation
D) lower; depreciation
D
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Based on the model of the money market, when real income decreases, the equilibrium interest rate should
A) stay the same. B) increase. C) decrease. D) increase to the same extent that the supply of money increases.
List and describe the sources of spending in the economy by focusing on the four major sectors of the economy
What will be an ideal response?
Refer to the above graph. This economy is at equilibrium:
A. at point b. B. at price level P1 and output Q1. C. at point a. D. at price level P2 and output Q2.
Once an equilibrium is achieved, it can persist indefinitely because
A) shocks that shift the demand curve or the supply curve cannot occur. B) shocks to the demand curve are always exactly offset by shocks to the supply curve. C) the government never intervenes in markets at equilibrium. D) in the absence of supply/demand shocks no one applies pressure to change the price.