If the current exchange rate is higher than the Fed's target exchange rate, the Fed would
A) implement purchasing power parity.
B) implement interest rate parity.
C) buy dollars.
D) sell dollars.
D
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
If velocity does not change and the quantity of money grows at the same rate as does real GDP, then in the long run
A) the real interest rate is less than the nominal interest rate. B) the inflation rate equals zero. C) the nominal interest rate equals zero. D) the inflation rate equals the growth rate of the quantity of money. E) the nominal interest rate is less than the real interest rate.
Briefly explain how unemployment insurance can stabilize the economy. Give an example.
What will be an ideal response?
Firms are not allowed to ask certain questions during job interviews, including marital status or how many children you have. Why is this the case?
A) People with children are more productive, thus it is unfair if the firm knows this information. B) Firms might use the answers to these questions as a means of statistical discrimination. C) People with children are less productive, thus the firm has no right to this information. D) Such questions violate the privacy clause of the U.S. Constitution.