It Has Been Argued That the Exchange Rate Can Be

question 31

Multiple Choice

It has been argued that the exchange rate can be used as a policy tool. Assume that the U.S. government would like to reduce unemployment. Which of the following is an appropriate action given this scenario?

• A) Weaken the dollar.
• B) Strengthen the dollar.
• C) Buy dollars with foreign currency in the foreign exchange market.
• D) Implement a tight monetary policy.

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Definitions:

Labor Market

A marketplace where labor services are bought (by employers) and sold (by workers), determining the allocation of labor resources and wages.

Equilibrium

A state in a market where the quantity supplied equals the quantity demanded, leading to a stable situation where there is no tendency for change.

Economic Rents

Payments made to a factor of production in excess of what is needed to keep it in its current use.

Supply Of Land

The total available land that can be used for agriculture, construction, or other purposes, often considered fixed in the short term.