Exchange rate overshooting explains()
A. why spot rates are so much more variable than price levels
B. why price levels change so frequently in one country and not in another
C. the policy assignment problem
D. domestic currency appreciation
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Under the Bretton Woods system, participating countries()
A. pegged their currencies to the U.S. dollar
B. maintained a fixed exchange rate with gold
C. allowed their currencies to float freely
D. pegged their values to the British pound
Which of the following is the best definition of monetary order()
A. a set of laws that establishes the framework for the economy to settle and conduct transactions
B. a set of rules for how money will be printed and counted within an economy
C. the policies that govern what will be considered money in an economy
D. the policies that establish the exchange rate system in an economy
When the central bank is focusing on internal balance, their main target in the economy is()
A. a desired level of real GDP
B. a balance of payments equilibrium
C. a certain level of real money balances
D. reducing government debt
When the short run effect of an increase in aggregate demand results in a rise in the nominal exchange rate()
A. exchange rate overshooting has occurred
B. the policy assignment problem is the likely culprit
C. monetary and fiscal authorities must renegotiate their roles in the economy
D. the long run equilibrium has likely increased as well