A currency devaluation is a(n):
A. reduction in the official value of a currency in a fixed-exchange-rate system.
B. increase in the official value of a currency in a fixed-exchange-rate system.
C. increase in the value of a currency relative to other currencies.
D. decrease in the value of a currency relative to other currencies.
Answer: A
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Assuming that the government can act immediately before the multiplier takes effect, then to offset an increase in investment by $1 billion, government purchases must be:
A. decreased by $2 billion. B. increased by $1 billion. C. decreased by $1 billion. D. decreased by $0.5 billion.
Which of the following would NOT cause a shift in the IS curve?
A) an increase in the domestic real interest rate B) an increase in consumer confidence C) a decrease in the expected future profitability of capital D) a decrease in government purchases
All of the following statements about inflation in the United States are correct except
A. Since the Great Depression, average prices have risen almost every year. B. The inflation rate was 13.5 percent in 1980. C. Inflation was at its worst during the Great Depression. D. Prior to World War II, the United States experienced periods of both deflation and inflation.
Which of the following might be a way that an automobile driver's pollution costs could be internalized?
A. The state could pay a gas subsidy for everyone who drives. B. The driver could purchase abatement equipment for her car. C. The state could eliminate gas taxes. D. The state could allow her to drive in the High-Occupancy Vehicle (HOV) lane.