A rise in interest rates tends to contract the economy by appreciating the currency and reducing net exports. Provide the reasoning behind this conclusion
Interest rate differentials and capital flows are typically the most important determinants of exchange rate movements. Suppose interest rates in the United States rise while foreign interest rates remain unchanged. This change in relative interest rates will attract capital to the United States and cause the dollar to appreciate. An appreciating dollar will, in turn, reduce net exports, prices, and output in the United States.
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The planning horizon refers to the short run, when the firm must plan how much of a variable input to apply to a fixed input
a. True b. False Indicate whether the statement is true or false
An example of a regressive tax is the
A) corporate income tax. B) personal income tax. C) Social Security tax. D) state inheritance tax.