In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt. During the day of this announcement, U.S. interest rates rose and the real exchange rate of the U.S. dollar depreciated. Which of these changes is consistent with the results of the open-economy macroeconomic model?
a. the increase in U.S. interest rates
b. the depreciation of the real exchange rate of the U.S. dollar
c. Both a and b are consistent.
d. Neither a nor b are consistent.
c
Economics
You might also like to view...
The Reagan administration's policies were aimed at managing aggregate demand
a. True b. False Indicate whether the statement is true or false
Economics
Which of the following is not an example of a monopolistically competitive market?
A) automobile producers B) supermarkets C) gas stations D) makers of women's clothing
Economics