If the central bank expands the money supply under floating exchange rates, it potentially stimulates the economy in two ways, namely:
A) by raising the price level and by increased competition.
B) by lowering the rate of interest and by causing a depreciation of the currency.
C) by creating higher spending and by increasing the budget deficit.
D) by increasing worker productivity and creating R&D incentives for firms.
Answer: B) by lowering the rate of interest and by causing a depreciation of the currency.
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Countries in sub-Saharan Africa are economically disadvantaged because infectious diseases spread in these countries relatively easily. This statement reflects the:
A) geography hypothesis. B) culture hypothesis. C) location hypothesis. D) institutions hypothesis.
The government of Eduland is planning to impose a tariff on the import of sports bikes. How is this policy likely to affect the domestic market for sports bikes in Eduland?
What will be an ideal response?