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You Have Just Noticed That the Dollar Appreciated and You

question 58

Multiple Choice

You have just noticed that the dollar appreciated and you suspect that the American government was behind this change.Which would you choose as the most likely cause of this appreciation in the real exchange rate?


Definitions:

Monetarists

Economists who theorize that alterations in the money supply have a major influence on the national output in the short run and affect price levels over more prolonged periods.

Rational Expectationists

Economists who argue that individuals make decisions based on their rational outlook, available information, and past experiences.

International Capital Flows

The movement of money for the purpose of investment, trade, or business production across international borders.

Central Bank

A bank whose chief function is the control of the nation’s money supply.

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