All else equal and given the current system of exchange rates, if the United States enters a period of exceptionally strong growth,
A) the pressure on the dollar is to revalue.
B) the pressure on the dollar is to devalue.
C) the pressure on the dollar is to depreciate.
D) the pressure on the dollar is to appreciate.
E) Both A and D.
C
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Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B
A) the unemployment rate is very, very low. B) incomes and profits are rising. C) firms are operating above their normal capacity. D) the economy is below full employment. E) there is pressure on wages and prices to rise.
When firms incur unplanned inventories, they typically
a. build new plants. b. call for more government spending. c. hire more workers and increase production. d. lay off workers and reduce production.
If two goods are substitutes, then
A) an increase in the price of one causes the demand for the other to fall. B) there is an inverse relationship between changes in the price of one good and changes in the demand for the other. C) if the price of one good falls, the demand for the other good falls also. D) changes in the quantity demanded of one good will not affect the demand for the other.
According to the quantity theory of money, an excess quantity of money supplied will lead to
A) a reduction in spending and higher interest rates. B) a reduced level of real Gross Domestic Product (GDP). C) a higher level of employment. D) a higher price level.