In a fixed exchange rate regime, an increase in the price level will cause which of the following?
A) a real appreciation and a leftward shift in the aggregate demand curve
B) a real appreciation and no shift in the aggregate demand curve
C) a real depreciation and a rightward shift in the aggregate demand curve
D) a real depreciation and no shift in the aggregate demand curve
E) no change in the real exchange rate, and no change in aggregate demand
D
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Opportunity cost reflected on a production possibilities curve is
A) the cost of reducing the output of one good in order to increase the output of another. B) the rate at which people are willing to exchange goods as determined by demand and supply. C) the dollar cost of the good given up to get another good. D) independent of the slope of the curve.
If policy makers expand aggregate demand, they can lower unemployment ____, but only by ____
a. temporarily; decreasing inflation b. temporarily; increasing inflation c. permanently; decreasing inflation d. permanently; increasing inflation