Expansionary monetary policy in a flexible exchange rate regime will cause
A) a shift of the IP curve.
B) an appreciation of the domestic currency.
C) a reduction in E.
D) no change in E.
C
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The short run sequence of events following an unanticipated shift to a more restrictive monetary policy would be
a. lower interest rates, decrease in aggregate demand, and a reduction in output. b. lower interest rates, increase in aggregate demand, and an expansion in output. c. higher interest rates, decrease in aggregate demand, and a reduction in output. d. higher interest rates, increase in aggregate demand, and an expansion in output.
During an economic boom:
A. the level of unemployment tends to be high. B. it is difficult for firms to recruit and retain workers. C. firms have an easier time purchasing raw materials. D. prices tend to decrease over time.