Exchange rate overshooting suggests that an unexpected increase in the domestic money supply by 10 percent will cause the short-run exchange rate value of the domestic currency to
A. appreciate by less than 10 percent.
B. depreciate by more than 10 percent.
C. depreciate by less than 10 percent.
D. appreciate by more than 10 percent.
Answer: B
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The price elasticity of demand for corn is 0.4. A new hybrid of corn is discovered and all farmers start to use it, which increases the quantity of corn they can produce from each acre. What happens to the farmers' total revenue?
A) The total revenue will increase. B) The total revenue will decrease. C) The total revenue will not change. D) There is not enough information to determine what happens to the total revenue.
Tax cuts shift aggregate demand
a. right as do increases in government spending. b. right while increases in government spending shift aggregate demand left. c. left as do increases in government spending. d. left while increases in government spending shift aggregate demand right.