Discuss the effects of a rise in the dollar interest rate on the exchange rate
What will be an ideal response?
There are two effects to consider. A rise in the interest rate offered by dollar deposits combined with a constant expected exchange rate will cause the dollar to appreciate (see Figure 14-5 from the text). However, the expected exchange rate will likely change. As Figure 14-6 from the text shows, if the expected exchange rate increases, the dollar will depreciate.
Figure 14-5
Figure 14-6
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People generally purchase less of a commodity as its price increases. This implies that the relationship between quantity purchased and the price of the commodity must have a
a. slope always equal to one. b. positive slope. c. zero slope. d. negative slope.
The net national debt is smaller than the gross national debt because
a. some debt is held by foreigners. b. some debt is held by U.S. citizens. c. some debt is held by government agencies. d. the government does not have to pay all of the debt.
What is a repeated game? How does this helps the players in a game?
What will be an ideal response?
Which of the following statements is a normative as opposed to a positive economic statement?
A. Consumer spending helps to create jobs. B. Labor unions should be allowed to organize in every country. C. When a government prints too much money, inflation tends to rise. D. If the price of cars goes up, people buy fewer cars.