Which of the following statements is (are) correct? The Mundell-Fleming model is
a. a new closed-economy model.
b. implicitly assumes a fixed domestic price level.
c. is an open-economy version of the IS-LM model.
d. Both b and c
D
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In an open market purchase, the Fed ________ government securities, which ________ bank reserves
A) buys, increases B) buys, decreases C) sells, increases D) sells, decreases
Which of the following terms describes the process in which the exchange rate equalizes the prices of internationally traded goods across countries?
a. purchasing power parity b. exchange c. profiteering d. arbitrage
Any test of rational expectations is a joint test of the underlying model that expectations are formed rationally.
Answer the following statement true (T) or false (F)
A decrease in the price level in the economy leads to:
A. a leftward shift in the demand for money curve. B. a rightward shift in the demand for money curve. C. a leftward movement along the demand for money curve. D. a rightward movement along the demand for money curve.