When an economy's production capacity is expanding:
A. nominal GDP, but not necessarily real GDP, is rising.
B. net exports is always a positive amount.
C. DI exceeds PI.
D. gross domestic investment exceeds depreciation.
D. gross domestic investment exceeds depreciation.
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An expansionary monetary policy results in lower interest rates, which in turn
A) reduces the international price of the dollar and increases net exports. B) increases the foreign demand for U.S. financial instruments, lowering the international price of the dollar and decreasing net exports. C) reduces the foreign demand for U.S. financial instruments and reduce net exports. D) increases foreign demand for U.S. financial instruments, raising the international price of the dollar and reducing net exports.
If prices rise within a country, then, other things equal, the value of a unit of domestic currency will:
a. rise in both the domestic and the foreign exchange markets. b. fall in both the domestic and the foreign exchange markets. c. rise in the domestic market and fall in the foreign exchange market. d. fall in the domestic market and rise in the foreign exchange market. e. fluctuate unpredictably in both domestic and foreign exchange markets.