Why Does an Exchange Rate-Output Combination Lying Above Both DD

question 80

Multiple Choice

Why does an exchange rate-output combination lying above both DD and AA jump first to AA in equilibrium?

• A) Asset prices can adjust immediately.
• B) Production plans can adjust immediately.
• C) to preserve full employment
• D) Prices are nominal and demand is real.
• E) Aggregate demand adjusts faster than output.

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Definitions:

Ratification

Ratification is the act of officially approving an agreement or contract, making it valid, or the process of confirming and accepting unauthorized actions by an agent on behalf of a principal.

Express Authority

The power given explicitly to an agent or representative by a principal, through verbal instructions or written documentation.

Implied Authority

Indicates the power or permission granted through actions or circumstances, not explicitly outlined in a contract or verbal agreement.

Apparent Authority

The impression given by an agent that they have been given the power to act on behalf of a principal, whether or not they actually have this authority.