Why does an exchange rate-output combination lying above both DD and AA jump first to AA in equilibrium?
A) Asset prices can adjust immediately.
B) Production plans can adjust immediately.
C) to preserve full employment
D) Prices are nominal and demand is real.
E) Aggregate demand adjusts faster than output.
Question 2
The median voter model
A) works well in the area of trade policy.
B) is not intuitively reasonable.
C) tends to result in biased tariff rates.
D) does not work well in the area of trade policy.
E) is not widely practiced in the United States.
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