Econ Final True/False
A fiscal expansion, al other factors equal, tends to increase net exports
False
An increase in domestic interest rates, all other factors equal, increases exports
False
The interest rate parity condition means that interest rates are equal across countries
False
When a country is experiencing a trade surplus, dean for domestic goods is greater than the domestic demand for goods
False
Exports will decrease when there is an increase in the real exchange rate
True
If financial investors expect the dollar to depreciate against the yen over the coming year, on year interest rates will be higher in the United States than in Japan
True
If the expected exchange rate appreciates, the current exchange rate immediately appreciatesapprecitates
True
Other things being equal, the interest party condition implies that the domestic currency will appreciate in response to an increase in the expected exchange rate
True
The central bank influences the value of the exchange rate by changing the domestic interest rate relative to the foreign interest rate
True
Under a fixed exchange rate, the central bank must keep the domestic interest rate equal to the foreign interest rates.
True
When the goods market is in equilibrium, domestic output equals the demand for domestic goods
True
Fiscal policy has a greater effect on output in an economy with fixed exchange rates than in an economy with flexible exchange rates
Uncertain