The value of a country's currency is likely to decline as a result of
A. higher inflation.
B. higher interest rates.
C. a trade surplus
D. a favorable balance of payments
Ans: A. higher inflation.
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In equilibrium, rate of growth of capital in a simple closed economy (i.e., x = 0 ) is determined primarily by
A) the growth rate of savings. B) the level of saving less expenditures for replacement capital. C) per capita well-being. D) the growth rate of replacement capital.
If the great majority of shocks to our system arise from unpredictable shocks to money demand, the preferred tactic of monetary policy is targeting
a. reserves. b. interest rates. c. M2. d. reserves plus currency.
In the above table, what is the marginal revenue product of the 2nd worker?
A) $99 B) $70 C) $110 D) $9
Discuss, using the Philips Curve, the effect of a policy aimed at lowering the inflation rate.
What will be an ideal response?