Advocates of flexible exchange rates claim that under flexible exchange rates, a currency
A) appreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products.
B) depreciation caused by increasing the money supply would increase unemployment by lowering the relative price of domestic products.
C) depreciation caused by increasing the money supply would reduce unemployment by lowering the relative price of domestic products.
D) depreciation caused by increasing the money supply would reduce unemployment by increasing the relative price of domestic products.
E) depreciation cause by decreasing the money supply would not effect unemployment, but would increase the relative price of domestic products.
C
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The term "direct relationship" means the same as
A) correlation. B) trend. C) positive relationship. D) negative relationship.
Estimation of the IV regression model
A) requires exact identification. B) allows only one endogenous regressor, which is typically correlated with the error term. C) requires exact identification or overidentification. D) is only possible if the number of instruments is the same as the number of regressors.