An increase in the demand for American-made goods will
A) increase the supply of dollars on the foreign exchange market.
B) decrease the supply of dollars on the foreign exchange market.
C) increase the demand for dollars on the foreign exchange market.
D) decrease the demand for dollars on the foreign exchange market.
Answer: C
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According to the real-balance effect, an increase in the price level will
A) leave total planned real expenditures unchanged since the price level of all goods has increased. B) decrease total planned real expenditures because of an increase in interest rates. C) lead to a corresponding increase in total planned real expenditures since businesses are now earning higher profits. D) decrease total planned real expenditures as a result of a decrease in the real value of money balances.
To fight inflation, the government may
a. decrease aggregate demand, which will also lead to lower unemployment rates. b. increase aggregate demand, which will also lead to lower unemployment rates. c. increase aggregate demand, which will also lead to higher unemployment rates. d. decrease aggregate demand, which will also lead to higher unemployment rates.