When the Fed practices contractionary monetary policy, the interest rate goes:
A. up, and the exchange rate will appreciate as a result.
B. up, and the exchange rate will depreciate as a result.
C. down, and the exchange rate will appreciate as a result.
D. down, and the exchange rate will depreciate as a result.
A. up, and the exchange rate will appreciate as a result.
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Assume that the full-employment level of output is $500, and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $450 and, at the price level of 100, current aggregate demand is $400. If the government wants to move the economy back to the full-employment level of output and the MPC is 0.75, then it should
A. reduce government purchases by $25. B. increase government purchases by $25. C. increase government purchases by $100. D. reduce government purchases by $100.
The largest sector of a developing country is usually
a. agriculture b. manufacturing c. services d. infrastructure e. none of the above
During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?
A) Ajax is taking advantage of asymmetric information. B) This is an example of a market failure and is a reason for the government to regulate the industry. C) The quality of the product could be improved if the amount of pollution can be reduced. D) This is known as the lemons problem.
The banking system’s ability to __________ money depends on people re-depositing the money that they receive into the banking system.
a. create b. spend c. save d. grow