Suppose the value of the us dollar changes from 1 12

This preview shows page 16 - 20 out of 22 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Financial Markets & Institutions
The document you are viewing contains questions related to this textbook.
Chapter 12 / Exercise 3
Financial Markets & Institutions
Madura
Expert Verified
43. Suppose the value of the US dollar changes from $1 = 1.2 euros to $1 = 1.30 euros. This being the case, imports from the US to Europe, have become more expensive to European citizens, all else constant. A) True B) False Points Earned: 0.0/1. 0 Correct Answer(s): True
44. One reason the aggregate demand curve slopes downward is due to the fact that if the price level falls, real money balances rise, all else constant, interest rates will fall causing an increase in consumption and investment.
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Financial Markets & Institutions
The document you are viewing contains questions related to this textbook.
Chapter 12 / Exercise 3
Financial Markets & Institutions
Madura
Expert Verified
45. Assuming that natural gas for firm X is an important input to the production process, an increase in the availability of natural gas that lowers the price of natural gas, will result in a leftward shift of firm X's supply curve.
Points Earned: 1.0/1. 0 Correct Answer(s): False 46. According to the lecture on the cyclical properties of the aggregate supply curve, I argued that aggregate demand side policy works better, in terms of influencing output, when the economy is operating at near full employment output relative to when the economy is operating at levels of output well below full employment.
Points Earned: 1.0/1. 0 Correct Answer(s): False 47. If labor markets become “loose” and wages fall, all else constant, the short run aggregate supply curve will shift to the left. A) True B) False Points Earned: 1.0/1. 0 Correct Answer(s): False
48.
The more 'sticky' nominal wages and other input costs are, the steeper the slope of the aggregate supply curve and therefore, the less effective demand side policies in terms of effecting real output.
Points Earned: 0.0/1. 0 Correct Answer(s): False 49. If the US economy is growing faster that the rest of the world, then we would expect a surge in US exports.
Points Earned: 1.0/1. 0 Correct Answer(s): False 50. Suppose that expected inflation is 5% and thus, nominal wages rise, along with all other input prices by 5%. Suppose also, that actual inflation over this period was only 2%. In terms of the behavior of the short-run aggregate supply curve, it would shift up given the expectations of higher inflation and then shift downward to adjust for the actual rate of inflation.
51. The more sensitive consumption is to real wealth, the steeper the aggregate demand curve.
A) True B) False
Points Earned: 0.0/1. 0 Correct Answer(s): False

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture