In a full-employment economy, a rise in M will cause inflation unless:
A. V rises in proportion to the increase in M.
B. the quantity of goods produced declines proportionately.
C. tax reductions accompany the increase in the money supply.
D. the velocity of money diminishes.
D. the velocity of money diminishes.
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If the current exchange rate is higher than the Fed's target exchange rate, the Fed would
A) implement purchasing power parity. B) implement interest rate parity. C) buy dollars. D) sell dollars.
The United States' balance of payments is likely to improve when
A) there is an increase in political instability in other countries. B) the inflation rate in the United States rises relative to other countries. C) the American government increases its spending on foreign aid. D) American people want to invest more in foreign countries.