Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

During a deflationary period,

A) the price level rises. B) the nominal interest rate does not change. C) the nominal interest rate is less than the real interest rate. D) the real interest rate is less than the nominal interest rate.

Under the fixed rate regime foreign countries could hold their dollar exchange rates constant by

A) using tight monetary policy. B) using expansionary fiscal policy. C) negotiating with the central bank of the United States. D) setting their domestic interest rate equal to the U.S. interest rate. E) holding their exchange rates constantly pegged to the euro and yen.

Sarah's demand curve for shoes has the same slope as Pete's; however, it lies to the right of Pete's. An increase in the price of shoes will cause

A) Sarah to incur a greater loss of consumer surplus than Pete will. B) Pete to incur a greater loss of consumer surplus than Sarah will. C) Sarah and Pete to incur the same loss of consumer surplus. D) Sarah's demand curve to shift closer to Pete's.

Under a system of flexible exchange rates, a decrease in demand for a nation's currency in the foreign exchange market will: a. make it less expensive for foreigners to buy the nation's goods

b. make it more expensive for the nation to import goods. c. cause the nation's balance on current account to shift toward a deficit. d. all of the above