What is the primary reason exchange rates were overvalued under ISI?
What will be an ideal response?
Because fixed exchange rates were used and inflation was higher than that of trading partners
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The long-run aggregate supply will increase when
A) labor supply decreases. B) international trade barriers are removed. C) the price level increases. D) tax rates increase.
If demand is perfectly elastic, then
a. the demand curve is a horizontal line b. supply is perfectly inelastic c. supply is perfectly elastic d. the demand curve is a vertical line e. the demand curve is downward sloping
The new Keynesian sticky-price theory indicates that an increase in aggregate demand generates
A. rapid increases in both real Gross Domestic Product (GDP) and the price level. B. sluggish increases in both real Gross Domestic Product (GDP) and the price level. C. a speedy rise in the price level but a sluggish increase in real Gross Domestic Product (GDP). D. a speedy rise in real Gross Domestic Product (GDP) but a sluggish increase in the price level.
In Figure 2.1, Box 3 would be labeled
A. S for supply. B. D for demand. C. P for price. D. P* for equilibrium price.