In the above figure, the economy is initially at point B. If the Fed decreases the quantity of money, there is

In the foreign exchange market, the exchange rate is volatile because the

A) factors that influence the supply of dollars also influence the demand for dollars. B) demand for dollars changes more frequently than the supply of dollars. C) both the demand curve for dollars and the supply curve of dollars are very flat. D) supply of dollars changes more frequently than the demand for dollars. E) None of the above is related to the volatility of the exchange rate.

Costs that deter firms from changing prices in response to demand changes are known as

A) sticky costs. B) menu costs. C) policy costs. D) production costs.