If the banking sector borrows internationally and lends locally, how does this intensify a financial crisis?
What will be an ideal response?
The borrowed funds have to be repaid with appreciating international currencies while payments received come in the depreciating local currency.
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A recession begins with a(n) ________ in spending by firms on capital goods and a(n) ________ in spending on durable goods by households
A) decrease; increase B) increase; increase C) decrease; decrease D) increase; decrease
If a person completely smooths consumption over his lifetime, then consumption is best represented by which of the following?
A) wealth / the number of years the person expects to live B) lifetime income / the number of years the person expects to work C) (wealth + lifetime income) / the number of years the person expects to live D) (wealth + lifetime income) / the number of years the person expects to work
Bertha does not expect any unforseen events but holds some of her savings as currency and coins placed in her sewing basket. This is an example of
A. precautionary demand for money. B. asset demand for money. C. transactions demand for money. D. speculative demand for money.
If the long-run average cost curve is U-shaped, the optimal scale of production from society's viewpoint is
A) the minimum efficient scale. B) where maximum economic profit is earned by producers. C) where firm profit is large enough to finance research and development. D) one which guarantees economic profit.