Suppose a country that has been pegging its currency is faced with a situation where financial market participants now expect some future devaluation. In such a situation, we would generally expect which of the following to occur?
A) a reduction in the domestic interest rate
B) an announcement by the central bank that a large devaluation will occur in the near future
C) reduction in demand for the country's currency
D) all of the above
E) none of the above
A
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The demand for money is
A) positively related to the nominal interest rate. B) positively related to the real interest rate. C) positively related to the price level. D) negatively related to real GDP. E) negatively related to the price level.
Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent, how do you expect inflation to change?
What will be an ideal response?
Which of the following is NOT a possible cause of structural unemployment?
A) individuals take the time to search for the best job opportunities B) a mismatch of worker training and skills with requirements of employers C) government-imposed minimum wage laws D) union activity that sets wages above the equilibrium level
Every unit of good x that is produced in the United States is exported to other countries. An increase in the price of good x shows up
a. in the consumer price index and in the GDP deflator. b. in the consumer price index, but not in the GDP deflator. c. in the GDP deflator, but not in the consumer price index. d. in neither the consumer price index nor in the GDP deflator.