If the Fed wants to lower the U.S. exchange rate, what action should it take in the foreign exchange market? Why does the action lower the exchange rate?
What will be an ideal response?
To lower the exchange rate, the Fed should sell dollars and buy foreign currency. By selling dollars, the Fed increases the supply of dollars, which lowers the U.S. exchange rate.
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When real GDP declines in a particular year, nominal GDP: a. will decline at a faster rate than real GDP if there is inflation. b. will decline at a slower rate than real GDP if there is inflation. c. may increase or decrease if there is inflation
d. will increase if there is deflation.
While their respective subject matters differ greatly, both microeconomists and macroeconomists rely on the same basic tools; that is, both rely on
a. government contracts to promote research and publications. b. demand-and-supply analysis. c. the economic theory of John Maynard Keynes. d. consumer protection laws and antitrust legislation.