Stabilization policy may be necessary to slow down the speed of the adjustment process.
Answer the following statement true (T) or false (F)
False
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Central banks intervene directly in foreign exchange markets by buying and selling ________
A) exports and imports B) foreign currencies C) U.S. government debt D) discount loans
Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had flexible exchange rates, these flows would have had the following effect on the nation's financial account and reserves account
a. Financial account would rise and reserves account would fall. b. Financial account would not change and reserves account would fall. c. Financial account would fall and reserves account would not change. d. Financial account would fall and reserves account would fall. e. Financial account would fall and reserves account would rise.
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.
Suppose the required reserve ratio is 20%. What is the maximum amount of total money supply that can be created from an initial deposit of $200? In general, why might the actual amount of total money creation be less than the maximum?