Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had fixed exchange rates, what effect would these flows have had on Venezuela's overall balance and value of the Bolivar (the Venezuelan currency)?
a. Overall balance would rise and value of the Bolivar would fall.
b. Overall balance would not change and value of the Bolivar would fall.
c. Overall balance would fall and value of the Bolivar would not change.
d. Overall balance would fall and value of the Bolivar would fall.
e. Overall balance would fall and value of the Bolivar would rise.
.C
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Moving along a short-run Phillips curve, a reduction in the unemployment rate is achieved by
A) reducing the size of the labor force. B) shifting the aggregate supply curve leftward. C) increasing potential GDP. D) running a federal budget deficit. E) increasing the inflation rate.
If the CPI for this year is 220 and the CPI for last year was 215, the inflation rate is
A) just over 2 percent. B) 5 percent. C) just over 5 percent. D) 10 percent.