Author Question: Assume that the fixed exchange rate system of 1.1 euros = 1 dollar is below the equilibrium exchange ... (Read 82 times)

sheilaspns · **on:** Jun 30, 2018

Assume that the fixed exchange rate system of 1.1 euros = 1 dollar is below the equilibrium exchange rate of 1.3 euros = 1 dollar in a flexible exchange rate system. Then, at the fixed exchange rate, the dollar would be

a. undervalued and the euro would be overvalued.
b. overvalued and the euro would be undervalued.
c. revalued and the euro would be devalued.
d. depreciated and the euro would be appreciated.

Question 2

In the classical and monetarist aggregate demand curves:

a. money is the primary factor driving changes in aggregate demand.
b. taxes can never shift aggregate demand.
c. government spending can never shift aggregate demand.
d. changes in aggregate demand drive most recessions.
e. both a and d.