In a fixed exchange rate regime, a reduction in the price level ...

[Mr. Wonderful]

In a fixed exchange rate regime, a reduction in the price level will cause which of the following?
 
  A) a real appreciation and a leftward shift in the aggregate demand curve
  B) a real appreciation and no shift in the aggregate demand curve
  C) a real depreciation and a rightward shift in the aggregate demand curve
  D) a real depreciation and no shift in the aggregate demand curve
  E) no change in the real exchange rate, and no change in aggregate demand

Question 2

Suppose there is an increase in the saving rate. This increase in the saving rate must cause an increase in consumption per capita in the long run when
 
  A) capital per worker approaches the golden-rule level of capital per worker.
  B) the saving is used for education rather than physical capital.
  C) the rate of saving exceeds the rate of depreciation.
  D) there is no technological progress.
  E) technological progress depends on human capital.

[Tonny]

Answer to Question 1

B

Answer to Question 2

A