According to the classical model, an increase in the American nominal money supply would cause the nominal exchange rate to ________ and the real exchange rate to ________
A) depreciate; appreciate
B) appreciate; depreciate
C) depreciate; remain unchanged
D) appreciate; remain unchanged
C
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If the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $1000 billion, and excess reserves total $1 billion, then the M1 money multiplier is
A) 2.5. B) 2.8. C) 2.0. D) 0.7.
Which statement best characterizes the second-best policy offered by a monopoly insurer when it can't observe the consumer's risk?
a. It is a single contract offering partial insurance at an intermediate price such that all types are served. b. It is a menu of contracts providing full insurance for the least risky types and partial insurance for higher risks. c. It is a menu of contracts providing full insurance for the riskiest type and partial insurance at lower prices for lower risks. d. The market breaks down since the monopolist cannot design contracts without observing each consumer's risk.
What might cause a decrease in current supply of a product?
A. A decrease in the price of one of the inputs used to make the product B. An increase in the product's own price C. New information that leads sellers to believe that the product's price will fall in the future D. New information that leads sellers to believe that the product's price will rise in the future
How do new classical economists view the importance of policy rules and discretion in macroeconomic policy?
What will be an ideal response?