A decline in the exchange rate could have been caused by which of these factors?
A. An increase in the domestic real interest rate
B. An increase in foreign output (income)
C. A decline in domestic output (income)
D. A decline in the world demand for domestic goods
Answer: D
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In a persisting demand-pull inflation,
A) aggregate supply decreases and aggregate demand increases. B) aggregate demand decreases and aggregate supply decreases. C) aggregate demand increases and potential GDP decreases. D) aggregate supply increases and aggregate demand increases. E) None of the above answers is correct.
The Coase theorem is the proposition that if property rights exist, the number of parties is small, and transactions costs are low
A) external costs result in deadweight losses. B) external benefits result in deadweight losses. C) private transactions are efficient. D) public transactions are efficient.