Refer to Figure 7.6. Which graph represents constant returns to scale?

Under a system of fixed exchange rates, what happens if a country's currency is undervalued?

A) The central bank loses official reserve assets. B) The central bank gains official reserve assets. C) The currency depreciates. D) The exchange rate falls.

The aggregate demand curve will shift outward and to the right when the Federal Reserve undertakes which of the following monetary policies?

a. Open market purchases of government securities b. An increase in the discount rate c. An increase in the reserve requirement d. A reduction in loans to the U.S. Treasury e. A more lenient supervision of savings and loan institutions