Under purchasing power parity (PPP), if U.S. monetary growth leads to a long run doubling of the U.S. price level, while Germany's price level remains constant, PPP predicts that the
A) long-run DM price of the dollar will be doubled.
B) long-run DM price of the dollar will be halved.
C) long-run DM price of the dollar will remain the same.
D) short-run DM price of the dollar will be halved.
E) short-run DM price of the dollar will be doubled.
B
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When the economy strengthens, following the period of quantitative easing, the Federal Reserve plans to keep a lid on money growth by
A) increasing reserve requirements. B) selling dollars in foreign-exchange markets. C) increasing the interest rate paid on reserves. D) buying dollars in foreign-exchange markets.
A decrease in supply will cause
a. an increase in demand. b. a decrease in demand. c. an increase in quantity demanded. d. a decrease in quantity demanded. e. a decrease in equilibrium price.