If financial investors believe that the prices of bonds and other assets will fall,
A) their precautionary demand for money goes up.
B) their speculative demand for money goes up.
C) their precautionary demand for money goes down.
D) their speculative demand for money goes down.
Ans: B) their speculative demand for money goes up.
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There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. An increase in income growth in Mexico relative to income growth in the United States will cause the
A) dollar to appreciate. B) peso to depreciate. C) dollar to depreciate. D) a and b E) There is not enough information to answer the question.
A federal deficit that raises interest rates will, everything else being equal,
A. lead to a dollar depreciation. B. decrease imports. C. reduce exports. D. reduce the balance of trade deficit.