If the desired amount demanded is greater than the desired amount supplied, then:
a. Business inventories could be rising or falling, depending on how they are valued.
b. Business inventories are falling.
c. Increases in residential construction are usually the reason, because they are measured at the end of each period.
d. It is impossible for demand to be greater than supply, because supply limits demand.
e. None are correct.
Question 2
Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had fixed exchange rates, these flows would have had the following effect on the reserves account and monetary base.
a. Reserves account would rise and monetary base would fall.
b. Reserves account would not change and monetary base would fall.
c. Reserves account would fall and monetary base would not change.
d. Reserves account would fall and monetary base would fall.
e. Reserves account would fall and monetary base would rise.
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