In an economy with a fixed exchange rate, an increased demand for foreign goods would increase the supply of local currency, and the government would have to buy:
A. foreign currency in the foreign exchange market to prevent the domestic currency from depreciating.
B. local currency in the foreign-exchange market to prevent the currency from depreciating.
C. local currency in the foreign-exchange market to prevent the currency from appreciating.
D. foreign currency in the foreign exchange market to prevent the domestic currency from appreciating.
B. local currency in the foreign-exchange market to prevent the currency from depreciating.
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In the classical model, desired saving
A) is inversely related to real income. B) exceeds investment. C) is equal to desired investment. D) is less than desired investment.
In perfectly competitive markets with identical firms, the burden of a tax is shared by consumers and producers in the short run so long as market demand is not perfectly elastic.
Answer the following statement true (T) or false (F)
In the short run, with predetermined prices, when output is less than planned aggregate expenditure:
A. planned investment is less than actual investment. B. potential output is less than short run equilibrium output. C. planned investment is greater than actual investment. D. potential output is greater than short run equilibrium output.
The formula for the CPI is 100 times
What will be an ideal response?