The existence of an inflationary gap should cause

Research shows that when exchange rates are more volatile, the price differentials are ____ and the convergence is _____.

A) smaller; faster B) smaller; slower C) larger; slower D) larger; faster

For the firm in the real intertemporal model with investment

A) depreciation occurs more quickly if the firm produces more output. B) depreciation takes place at a constant rate. C) depreciation can be slowed with more maintenance. D) depreciation is always 100%.