The open-economy IS curve slopes down because any change in the foreign or home interest rate will inversely affect demand, along with a secondary effect from a change in:
A) the rate of depreciation of assets.
B) the exchange rate and the trade balance.
C) the real interest rate.
D) the growth rate of money.
Answer: B) the exchange rate and the trade balance.
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Which of the following is an example of opportunity cost?
A. The income that could have been earned by working full-time instead of going to college. B. The decline in the grades of a student athlete that occurs because she decides to spend more time practicing sports than on her academic work. C. The value of other things you could have done with the same time and money it cost you to go to the movies. D. All of the choices are examples of opportunity cost.
The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if the price of a steak dinner fell?
A) It would rotate inward around the vertical intercept, 10 lobster dinners. B) It would rotate outward around the vertical intercept, 10 lobster dinners. C) It would rotate inward around the horizontal intercept, 20 steak dinners. D) It would rotate outward around the horizontal intercept, 20 steak dinners.
If the required reserve ratio is 0.2, the demand deposit multiplier is
a. 0.2 b. 0.8 c. 1.25 d. 5.0 e. 8.0
A country that fixes a price for its currency that is below the market price will:
A. decrease its money supply. B. eventually increase the value of its currency. C. lose official reserves. D. accumulate official reserves.