Under a fixed exchange rate regime, if the domestic currency is initially undervalued, that is, above par, the central bank must intervene to sell the ________ currency by purchasing ________ assets

A key lesson from the payroll tax is that the

a. tax is a tax solely on workers. b. tax is a tax solely on firms that hire workers. c. tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive. d. true burden of a tax cannot be legislated.

When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.

A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline