Which of the following is most likely to happen if the demand for money decreases in the domestic economy under floating exchange rates and free capital mobility?
A. The average price level in the domestic economy will decrease.
B. The domestic interest rate will increase.
C. Domestic borrowing will decline.
D. The financial account of the country's balance of payments will deteriorate.
Answer: D
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GDP data alluding to the start of a recession in January 2015 was published and analyzed by the Fed in July 2015
The Fed held meetings to formulate a monetary policy to deal with the recession, and then it enacted the chosen policy in September 2015. It was December 2015 before the policy actually began to affect the economy. The three-month period from September 2015 to December 2015 exemplifies a(n) A) recognition lag. B) implementation lag. C) impact lag. D) liquidity lag.
Which of the following will be excluded from the measurement of gross domestic product (GDP)?
a. The market value of automobiles purchased by the federal government b. The market value of California wine purchased by a Canadian firm c. The payment of employees' medical insurance d. The market value of computers purchased by state governments e. The market value of transactions in the underground economy