When the exchange rate, E, and the foreign price level, P*, is fixed, domestic inflation depends primarily on
A) amount of aggregate demand.
B) home price level set by IMF.
C) current account balance.
D) government tax policy.
E) foreign interest rates.
A
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Developing countries that concentrate production in agricultural products or raw materials may face a secular decline in their international terms of trade due to
A) sluggish demand for these products in developed countries. B) large increases in the supplies of these products on world markets due to export expansion policies. C) inelastic demand for these products in developed countries. D) All of the above.
The Fed's countercyclical policy during expansion and prosperity includes:
A. raising the required reserve ratio, raising the discount rate, and selling government bonds on the open market. B. raising the required reserve ratio, raising the discount rate, and buying government bonds on the open market. C. raising the required reserve ratio, cutting the discount rate, and selling government bonds on the open market. D. lowering the required reserve ratio, cutting the discount rate, and buying government bonds on the open market.