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Question
When the domestic currency is initially undervalued in a fixed exchange rate regime, the central bank must intervene in the foreign exchange market to ________ the domestic currency, thereby allowing the money supply to ________.A) purchase; decline
B) sell; decline
C) purchase; increase
D) sell; increase
Answer
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Related questions
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The organization responsible for the conduct of monetary policy in the United States is the
A. Comptroller of the Currency.
B. U.S. Treasury.
C. Federal Reserve System.
D. Bureau of Monetary Affairs.
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A. balanced budgets.
B. rapidly growing money supplies.
C. falling money supplies.
D. constant money supplies.
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A. exchanges.
B. banks.
C. over-the-counter markets.
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Banks, savings and loan associations, mutual savings banks, and credit unions
A. are no longer important players in financial intermediation.
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Which of the followings does NOT describe the goods market in the ISLM model?
A. consumption function
B. investment function
C. government spending and tax
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An autonomous increase in money demand, other things equal, shifts the ________ curve to the ________.
A. IS; right
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Q:
A policy in which the money supply is kept growing at a constant rate regardless of the state of the economy is
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Q:
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Q:
The Lucas critique indicates that
A. advocates of discretionary policies' criticisms of rational expectations models are well-founded.
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Q:
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If the economy suffers a permanent negative supply shock because there is an increase in regulations that permanently reduce the level of potential output, then
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Q:
With the policy rate set at zero, the rise in expected inflation will lead to a ________ in the real interest
rate, which will cause investment spending and aggregate output to ________.
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B. Instead of relying solely on the economy's self-correcting mechanism, much more aggressive fiscal expansions than those of the U.S. (in addition to a substantial monetary easing) served to shift the AD curve back to general equilibrium relatively quickly.
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Q:
Explain and demonstrate graphically the effects of a negative supply shock in both the short-run and long-run.
Q:
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A. increase; increase
B. increase; decrease
C. decrease; increase
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Q:
________ in the foreign interest rate causes the demand for domestic assets to shift to the right and the domestic currency to ________, everything else held constant.
A. An increase; appreciate
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D. A decrease; depreciate
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A. right; appreciate
B. right; depreciate
C. left; appreciate
D. left; depreciate