Suppose the Chinese central bank wants to keep the exchange rate of its currency value constant over time. An increase in the demand for Chinese goods by American residents will lead the Chinese central bank to
A) coordinate with the U.S. central bank in order to increase the supply of the U.S. dollar in the foreign exchange market.
B) increase the demand for the Chinese currency in the foreign exchange market.
C) use its dollar reserves to buy the Chinese currency in the foreign exchange market.
D) sell the Chinese currency in exchange for U.S. dollars in the foreign exchange market.
D
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The central problem all individuals face is
A) greed. B) insufficient money income. C) scarcity of resources. D) the desire for present enjoyment. E) unequal wealth.
In Figure 13-3 above, suppose that the Fed maintains a fixed real money supply and that commodity demand is also fixed. The range of shifts in the LM curve, LM1 to LM2 can then only be explained by
A) changes in the velocity of money. B) changes in the price level. C) changes in the demand for money. D) A and C.
If the price of potato chips increases, other things constant, demand for potato-chip dip will:
a. not change; only quantity demanded will change. b. increase, because the goods are substitutes. c. decrease, because the goods are substitutes. d. decrease, because the goods are complements. e. increase, because the goods are complements.
Lucinda is a farm owner who believes the market price for her crops is insufficient to cover her expenses and make a worthwhile profit. Which government action on farm goods would Lucinda most likely support?
a. price decreases b. price ceilings c. price floors d. price maximums