Discuss what factors could cause a real depreciation
What will be an ideal response?
Decrease in E; increase in P*; and decrease in P.
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Countries with
A) strong investment opportunities should invest little at home and channel their savings into more productive investment activity abroad. B) strong investment opportunities should invest more at home and less abroad. C) weak investment opportunities should invest more at home. D) weak investment opportunities should invest little abroad. E) countries with productive investment should invest exclusively at home.
A combination of Fed purchases of government securities and an increase in reserve requirements would: a. increase the money supply
b. decrease the money supply. c. leave the money supply unchanged. d. have an indeterminate effect on the money supply.