If the interest rate is 7 percent on euro-denominated assets and 5 percent on dollar-denominated assets, and if the dollar is expected to appreciate at a 4 percent rate, for Francois the Frenchman the expected rate of return on dollar-denominated

Refer to Figure 13-1. Ceteris paribus, an increase in personal income taxes would be represented by a movement from

A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.

The supporters of a monetary growth rule believe that active monetary policy

A) stabilizes the economy, decreasing the number of recessions and their severity. B) destabilizes the economy, increasing the number of recessions and their severity. C) cannot change real GDP. D) cannot change the inflation rate.