Author Question: Suppose the economy is in long-run and short-run equilibrium. The Fed changes its policy by raising ... (Read 32 times)

genevieve1028 · **on:** Jun 30, 2018

Suppose the economy is in long-run and short-run equilibrium. The Fed changes its policy by raising the difference between the discount rate and the federal funds rate. In the long run we would expect to observe

A) a higher real national income. B) a lower real national income.
C) a higher price level. D) a lower price level.

Question 2

If an undervalued currency is allowed to float:

A) its value will depreciate.
B) its quantity supplied in exchange for the other currency will decrease.
C) its quantity demanded in exchange for the other currency will increase.
D) its value will appreciate.