Everything else equal, if the Fed decided to fix the euro/dollar exchange rate, what would be the impact on the money supply in the U.S. if the euro started to decline in value and why?
What will be an ideal response?
If the Fed desired to fix the exchange rate between the euro and the dollar and the euro began to depreciate, the Fed would have to buy euros, which means they would be selling dollars. The sale of dollars would expand the monetary base which, through the money multiplier, could expand the money supply and have an impact (reduction) on interest rates.
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Consider a small open economy in equilibrium. What happens to the real interest rate, national saving, investment, and the current account balance in equilibrium in each of the following situations (each taken separately)
Explain which curve shifts and why, and show a diagram explaining your results. (You may assume that none of the shocks is large enough to significantly affect labor supply or labor demand significantly.) (a) wealth declines (b) business taxes decline (c) income rises temporarily
Economists disagree with constant government bailouts of large, struggling companies because it can give a rise to
a. Moral hazard b. Adverse selection c. Lazy managers d. None of the above
The concept of poverty is culturally determined, and hence people are defined as “poor” in relation to others.
Answer the following statement true (T) or false (F)
The extra amount of output a business can generate by adding one more hour of labor is called
A. marginal cost. B. labor input. C. marginal product. D. marginal revenue.