Persistently expansionary monetary policy that stimulates aggregate demand and leads to inflation will
a. lead to higher rates of real output in the long run.
b. fail to increase real output once decision makers fully anticipate the inflation.
c. lead to lower nominal interest rates once decision makers fully anticipate the inflation.
d. permanently reduce the rate of unemployment below its natural rate.
B
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The gravity equation was tested and found to be very accurate in predicting:
a. world trade in total. b. trade between various provinces in Canada and American states. c. trade between the United States and Japan. d. trade between nations in the European Union.
Everything else equal, a decrease in the demand for dollars in exchange for the pesos:
A) will cause the dollars to depreciate against the pesos and will increase the quantity of dollars being traded in the foreign exchange market. B) will cause the dollars to depreciate against the pesos and will decrease the quantity of dollars being traded in the foreign exchange market. C) will cause the dollars to appreciate against the pesos and will decrease the quantity of dollars being traded in the foreign exchange market. D) will cause the dollars to appreciate against the pesos and will increase the quantity of dollars being traded in the foreign exchange market.