The U.S. dollar's effective exchange rate since 2002 has steadily weakened. However, it didn't weaken as much against ALL currencies as it did against the currencies of the major developed countries (which include the pound and the euro). This could be because:
a. the U.S. government has a strong dollar policy.
b. the large trading partners, China and Japan, did not allow their currencies to appreciate greatly against the U.S. dollar.
c. the rate of appreciation is always somewhat greater than the rate of depreciation.
d. the United States does not trade with some nations, so the effective rate is biased.
Ans: b. the large trading partners, China and Japan, did not allow their currencies to appreciate greatly against the U.S. dollar.
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Contrary to what the Phillips curve would have predicted, the U.S. economy in the 1970s experienced simultaneous increases in inflation and unemployment
a. True b. False Indicate whether the statement is true or false
In the long run
a. both supply and demand shocks have permanent effects on real GDP. b. real GDP can remain below potential. c. real GDP can remain above potential. d. both supply and demand shocks have no effect on real GDP. e. supply shocks have permanent effects on real GDP but demand shocks have no effect.