Author Question: If currencies around the world are based on the gold standard, and the EU lowers the amount of gold ... (Read 281 times)

olgavictoria · **on:** Jun 29, 2018

If currencies around the world are based on the gold standard, and the EU lowers the amount of gold for which the euro will trade, then holding all else constant,

A) the euro will depreciate against the dollar.
B) the value of U.S. exports to EU countries in terms of the euro will decrease.
C) the value of the euro relative to the dollar will stay constant.
D) the euro will appreciate against the dollar.

Question 2

Refer to Figure 16-4. In the graph above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?

A) an increase in the marginal income tax rate B) an increase in interest rates
C) an increase in transfer payments D) an open market purchase of Treasury bills