Assume that the current exchange rate between U.K. pound and the U.S. dollar is 2 (E = 2.0). If interest parity holds, and the U.S. interest rate is 6% while the U.K. interest rate is 8%, the expected exchange rate in one year is

Which of the following is the least likely take place if the Fed responds to a negative demand shock by reducing the real interest rate?

A) IS shifts to the right B) output gap returns to zero C) inflation returns to its previous rate D) MP shifts down

Which of the following is most likely to be a monopolistically competitive firm?

A) a soybean farmer B) a lettuce farmer C) a municipal water district D) a fast food restaurant