Assume That Policy Makers Are Pursuing a Fixed Exchange Rate

question 41

Multiple Choice

Assume that policy makers are pursuing a fixed exchange rate regime.Assume that the economy is initially operating at the natural level (i.e.,Y = Yn) .Suppose a reduction in wealth causes households to reduce consumption.This wealth-induced decrease in consumption will cause which of the following to occur?

• A)the real exchange rate will be permanently higher in the medium run.
• B)the real exchange rate will be permanently lower in the medium run.
• C)the effects of this devaluation on the real exchange rate will be ambiguous in the medium run.
• D)the real exchange rate will be unchanged in the medium run.

Understand the construction and interpretation of box and whisker plots.

Differentiate between various statistical theorems (Tchebysheff's Theorem and the Empirical Rule) and their applicability.

Apply Tchebysheff's Theorem to estimate the bounds of data distributions.

Apply the Empirical Rule to mound-shaped distributions to determine data spread.

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