Along an LM curve at lower income levels the transactions demand for money is __________, so the interest rate must be __________ to equate the demand to the fixed supply of money

One of the strongest motivations for holding the Bretton Woods Conference was to design new international institutions that would

A) contain communism. B) help countries avoid the mistakes of the 1920s and 1930s. C) provide a collective defense security for Western Europe and North America. D) ensure that world prices were not rising too rapidly.

Suppose the exchange rates between the United States and Canada are in long-run equilibrium as defined by the idea of purchasing power parity. If the law of one price holds perfectly, then differences between U.S. and Canadian rates of inflation would

A) have no effect on nominal exchange rates. B) be completely offset by changes in the real exchange rate. C) be completely offset by changes in the nominal exchange rate. D) lead to a change in the real purchasing power of each country's currency when it is converted to the other country's currency.