11 under a system of fixed exchange rates a only

11. Under a system of fixed exchange rates:
A. only monetary policy can affect income.
B. only fiscal policy can affect income.
C. both monetary and fiscal policy can affect income.
D. neither monetary nor fiscal policy can affect income.

12. Under a system of floating exchange rates:
13. Suppose country A has a higher risk premium than country B. One can then infer
that country A:
14. Many economists favor a system of floating exchange rates because it: Ch-14
1. Consider the following aggregate supply equation: 𝑌 = 𝑌
̅
+  (𝑃 − 𝐸𝑃)
Based on this equation, if the observed price ( P ) exceeds the price expected by the
producers ( EP ), then:
A. 𝑌 > 𝑌
B. 𝑌 = 𝑌
C. 𝑌 < 𝑌
D. 𝑌 = 0
̅
̅
̅
2. The positive relationship between the price level and the amount of output means
that the aggregate supply curve is:
3. Sticky prices can result from all of the following except: 4. In the sticky-price model, if all firms set their price in advance, then the short-run
aggregate supply curve will be:

C. downward-sloping.
D. vertical.
5. In the sticky-price model, if no firms set their price in advance, then the short-run
aggregate supply curve will be:
A. horizontal.
B. upward-sloping.
C. downward-sloping.
D. vertical.
6. In the imperfect-information model, it is assumed that firms:
7. The Phillips curve represents the trade-off between: 8. The modern Phillips curve posits that the inflation rate depends on three forces.
On which of the following does it NOT depend?
9. The inflation that tends to occur when unemployment is below the natural rate is
called:
A. expected inflation.
B. wage inflation.
C. demand-pull inflation.
D. cost-push inflation.
10. When people believe that policymakers are credibly committed to lowering
inflation, the sacrifice ratio will be: