Using the money demand and money supply model, an open market sale of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to

Why does an exchange rate-output combination lying above both DD and AA jump first to AA in equilibrium?

A) Asset prices can adjust immediately. B) Production plans can adjust immediately. C) to preserve full employment D) Prices are nominal and demand is real. E) Aggregate demand adjusts faster than output.

Suppose that in the United States and the United Kingdom the real rate of interest is 1 percent and constant. In this case, the nominal interest rates in both countries

A) are equal. B) differ solely by the expected future spot rate differential. C) differ solely by the expected inflation differential. D) differ solely by the forward rate differential.