Explain why the changes we observe in nominal exchange rates in the short run must be due primarily to changes in the real exchange rate in countries with low inflation.
What will be an ideal response?
In the short run prices do not move that much, so changes we observe in the nominal exchange rate must be attributed to changes in the real exchange rate, since the real exchange rate adjusts for price differences.
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Refer to the table below. ________ has the comparative advantage in making pizza, and ________ has the comparative advantage in delivering pizza. Pizzas MadePer HourPizzasDeliveredPer HourCorey126Pat1015
A. Pat; Pat B. Corey; Pat C. Pat; Corey D. Corey; Corey
Suppose that the economy is in long-run equilibrium and the government decided to engage in expected expansionary policy by increasing the money supply
If we assume rational expectations, which of the following statements is correct about the effect of expansionary policy in the long run? A) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease. B) The unemployment rate will increase, real GDP will increase and the price level will increase. C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase. D) The unemployment rate will decrease, real GDP will decrease and the price level will decrease.
Which one of the following is a way to get out of a repeated Prisoner's Dilemma Nash Equilibrium?
a. Do not be forgiving b. Be forgiving c. Punish the competitors severely forever d. All of the above
Empirical evidence indicates that imposing taxes on polluting emissions by firms
a. has no effect on the amount of pollution emitted. b. does not give the government leeway to regulate more dangerous emissions differently than less dangerous emissions. c. does reduce the amount of pollution emitted. d. discourages firms from investing in new methods of pollution abatement.