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Author Question: If the exchange rate appreciates, then the A) quantity of dollars demanded increases. B) demand ... (Read 32 times)

tiara099

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on: Jun 29, 2018
If the exchange rate appreciates, then the
 
  A) quantity of dollars demanded increases.
  B) demand for dollars decreases.
  C) quantity of dollars demanded decreases.
  D) demand for dollars increases.
  E) supply of dollars decreases.

Question 2

What is the short-run and long-run effect on the nominal interest rate from an increase in the growth rate of the quantity of money?
 
  What will be an ideal response?


epscape

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Reply #1 on: Jun 29, 2018
Answer to Question 1

C

Answer to Question 2

In the short run, the increase in the growth rate of the quantity of money lowers the nominal interest rate. However in the long run the increase in the growth rate of the quantity of money creates higher inflation and the higher inflation leads to a rise in the nominal interest rate.


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