If the central bank increases the money supply, in the short run, the price level
a. and unemployment rise.
b. rises and unemployment falls.
c. falls and unemployment rises.
d. and unemployment fall.
b
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Why does a government impose controls or restrictions on converting domestic currency to foreign currency (capital controls)?
a. The government is trying to stop the rapid decline in value of the domestic currency. b. The government wants to speculate on its own currency c. The government is trying to suppress international trade d. The government is trying to avoid imposing taxes on citizens.
Consumers in a country buy only two goods, pens and CDs. The prices and quantities purchased by urban households are in the table above. The reference base year is 2011. If the current year is 2012, the cost of the CPI market basket in 2012 is
A) $3,400. B) $3,508. C) $3,580. D) $3,500. E) $3,588.