Author Question: The monetary approach to interest rates assumes that the prices of goods are ________, which implies ... (Read 35 times)

silviawilliams41 · **on:** Jun 30, 2018

The monetary approach to interest rates assumes that the prices of goods are ________, which implies that a country's currency will ________, when nominal interest rates ________ because of ________ expected future inflation.

A) perfectly flexible; depreciate; increase; higher
B) perfectly flexible; appreciate; increase; higher
C) immutable; depreciate; increase; higher
D) immutable; appreciate; decrease; higher
E) absolutely inflexible; depreciate; decrease; higher

Question 2

The slope of a country's production possibility frontier is equal to ________ and the optimal production point is located where the slope is equal to ________.

Assume that output of good Y is measured on the vertical axis, output of good X is measured on the horizontal axis, MPL is the marginal product of labor with a subscript indicating which good, P is the price of a good, and w is the wage rate. A) -MPLY/MPLX; -PX/PY
B) -PX/PY; -MPLY/MPLX;
C) -PX/w; -PY/w
D) -MPLY/w; -MPLF/w
E) -MPLX/MPLY; -PX/PY