To what extent can monetary policy be used to affect output in a fixed exchange rate regime? Explain
What will be an ideal response?
It cannot. To peg the exchange rate, the central bank must keep the domestic interest rate equal to the exogenous foreign interest rate. The domestic central bank cannot independently change its interest rate.
Economics
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Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream
A) increases by 5 percent. B) increases by 20 percent. C) decreases by 5 percent. D) decreases by 20 percent.
Economics
Which of the following U.S. taxes is the most consistent with the ability-to-pay principle?
a. The excise tax on gasoline. b. The federal income tax. c. State sales taxes. d. The Social Security payroll tax.
Economics