Using the asset model of short-run exchange rate determination, once the domestic rate of return is determined by MS and MD, the short-run equilibrium ___ can be determined if prices are inflexible and expectations are given.
a. interest rate
b. exchange rate
c. price level
d. income level
Answer: b. exchange rate
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How did the international monetary system created at Bretton Woods in 1944 allow its members to reconcile their external commitments with their internal goals of full employment and price stability?
What will be an ideal response?
Which of the following assets would be considered least liquid?
a. A silver coin b. An antique automobile c. A U.S. savings bond d. A debit card e. A certificate of deposit
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.
Minimum wage laws
a. creates a surplus of labor in markets where the equilibrium wage is above the minimum wage. b. cannot be valid unless labor unions are sufficiently powerful to force enactment of those laws in the first place. c. are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets. d. All of the above are correct.