If the market for hula-hoops is characterized by a very inelastic supply curve and a very elastic demand curve, an inward shift in the supply curve would be reflected primarily in the form of

A federal deficit of $300 billion means that

A) the government plans on collecting $300 billion in taxes this year. B) the government has a total debt of $300 billion. C) the government is spending $300 billion a year more than it is collecting in taxes. D) government spending is $300 billion a year.

In the above figure, suppose the demand for dollars temporarily increases so that the demand curve shifts to D1. To maintain the target exchange rate, the Fed

A) can sell dollars. B) can buy dollars. C) must violate interest rate parity but not purchasing power parity. D) cannot maintain the target exchange rate.