If the Fed follows a policy of fixed exchange rates, an undervalued dollar will force the Fed to
a. conduct open market purchases.
b. raise the discount rate.
c. raise the required reserve ratio.
d. cut taxes or raise government spending.
A
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According to the liquidity premium theory, if market participants expect that inflation in the future will be lower than it currently is, the yield curve will
A) slope upward. B) be flat. C) be inverted. D) be vertical.
A person who starts practicing poisonous snake charming after signing a contract with a health insurance company is an example of
A) moral hazard. B) adverse selection. C) signaling. D) screening.
____ yields the same results as the theory of perfect competition, but requires substantially fewer assumptions than the perfectly competitive model
a. Baumol's sales maximization hypothesis b. The Pareto optimality condition c. The Cournot model d. The theory of contestable markets e. none of the above
For about the last 45 years, state and local taxes have remained relatively constant as a percentage of GDP
a. True b. False Indicate whether the statement is true or false