Everything else equal, if the Fed decided to fix the euro/dollar exchange rate, what would be the impact on the interest rate in the U.S. if the euro started to appreciate in value and why?
What will be an ideal response?
If the Fed desired to fix the exchange rate between the euro and the dollar and the euro began to appreciate, the Fed would have to sell euros, which means they would be buying dollars. The purchase of dollars would contract the monetary base which, through the money multiplier, could contract the money supply and cause domestic interest rates to increase.
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A supply curve is the same as a
A) total cost curve. B) marginal cost curve. C) total benefit curve. D) marginal benefit curve. E) deadweight loss curve.
If the price is less than a perfectly competitive firm's minimum average variable cost, the firm
A) makes an economic profit. B) operates and incurs an economic loss equal to total fixed cost. C) operates and incurs an economic loss equal to average variable cost. D) shuts down and incurs an economic loss equal to total fixed cost. E) shuts down and incurs an economic loss equal to average variable cost.