Question
Label the following statements as true, false or uncertain, and provide explanation for your answer. (A). A country's current account balance equals the change in
Label the following statements as true, false or uncertain, and provide explanation for your answer.
(A). A country's current account balance equals the change in its net foreign wealth.[2.5points]
(B). The reason the aggregate real money demand curve is downward-sloping is because a decrease in the interest rate increases spending and real income, leading people to want to hold more money. [2.5 points]
(C) .Long-run equilibrium in the FX market requires equality between the domestic interest and the foreign interest rate (R=R*). [2.5 points]
(D). Other things equal, the adoption of more expansionary domestic monetary policy will affect the long-run equilibrium values of both the nominal and real exchange rates. [2.5 points]
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