In an open economy, an increase in capital inflows ________ the equilibrium domestic real interest rate and ________ the quantity of domestic investment.
A. increases; decreases
B. increases; increases
C. decreases; decreases
D. decreases; increases
Answer: D
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In which system are decisions made by thousands of people who have information about resources, production technology and consumer desires?
A) market system B) socialist system C) centrally planned system D) command system
Everything else equal, if the Fed decided to fix the euro/dollar exchange rate, what would be the impact on the interest rate in the U.S. if the euro started to appreciate in value and why?
What will be an ideal response?
An individual who cannot find a job because his or her job skills have become obsolete is an example of
A. structural unemployment. B. frictional unemployment. C. seasonal unemployment. D. cyclical unemployment.
Answer the following statements true (T) or false (F)
1. In the monetarist view, the economy is inherently stable, but the mismanagement of monetary policy creates instability. 2. Monetarists argue that V in the equation of exchange is stable and thus a change in M will bring about a direct and proportional change in nominal GDP. 3. If M is $1,000, P is $8, and Q is 500, then V must be 6. 4. The equation of exchange indicates that an increase in money supply will always lead only to inflation. 5. Real-business cycle theory views changes in resource availability and technology as shifting aggregate demand and thus causing macroeconomic instability.