A recommended policy for DVCs to implement that promotes economic growth is:
A. Establishing realistic policies for exchange rates
B. Obtaining more low-interest loans from the U.S. government
C. Encouraging more tariffs and quotas to protect DVC businesses
D. Discouraging direct foreign investment to make DVCs more self-sufficient
A. Establishing realistic policies for exchange rates
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When there are increasing returns to scale, average costs must be:
a. falling. b. rising. c. constant. d. falling, then rising.
Purchasing power parity exists when domestic currency
A. buys as many goods abroad as at home. B. buys more goods at home than abroad. C. is not convertible to a foreign currency. D. maintains a fixed exchange rate with a foreign currency.
Today's exchange rate system can be described as
a. a fixed exchange rate system b. a freely floating exchange rate system c. a pegged exchange rate system d. a flexible exchange rate system e. a managed float
A country has a comparative advantage if it can produce a good or service
A. at a higher opportunity cost than can other nations. B. at a lower opportunity cost than can other nations. C. by using less resources than other nations. D. that lies outside its production possibilities curve.