Floating exchange rates are market determined, that is, supply and demand for foreign exchange sets the rate in the foreign exchange market

The interest-rate effect

a. depends on the idea that increases in interest rates decrease the quantity of goods and services demanded. b. depends on the idea that increases in interest rates decrease the quantity of goods and services supplied. c. is responsible for the downward slope of the money-demand curve. d. is the least important reason, in the case of the United States, for the downward slope of the aggregate-demand curve.

Suppose consumer tastes and preferences shift from tacos to pizzas. In the short run, these changing tastes will result in pizza restaurants ________ pizza prices and taco restaurants ________ taco prices

A) increasing; increasing B) decreasing; increasing C) decreasing; decreasing D) increasing; decreasing