Why is the international financial system today often called a “nonsystem”?
What will be an ideal response?
There is no grand organizing principle in the international financial system today. Some currencies are still pegged in the old Bretton Woods manner. A few small countries, such as Panama and Ecuador, have taken the more extreme step of actually adopting the U.S. dollar as their domestic currencies. Other nations tie their currencies to a hypothetical “basket” of several currencies, rather than to a single currency. More nations, however, let their exchange rates float, although not always freely. But governments do not hesitate to intervene to moderate exchange movements whenever they feel such actions are appropriate. Thus, the international financial system is so diverse that it is often called a “nonsystem.”
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Which of the following is NOT a feature of recent U.S. business cycles?
A) The time series of deviations from trend in real GDP is quite choppy. B) The time series of deviations from trend in real GDP is quite smooth. C) There is no regularity to the amplitude of fluctuations in real GDP above trend. D) There is no regularity to the frequency of fluctuations in real GDP above trend.
The distinction between microeconomics and macroeconomics is
A) clearly drawn, and there is no overlap between them. B) determined by economists in a clear and concise manner. C) narrowly drawn, and microeconomic analysis often relies on macroeconomic tools. D) often blurred because aggregates are made up of individuals and firms.
Which of the following is an example of the wealth effect during a period of inflation?
A. A firm receives a fixed price for the services it sells while the price level is rising B. You hold money in a savings account that earns 5 percent interest while the price level doubles C. Your income stays constant while the price level doubles D. You pay for utilities that are becoming more expensive as the price level is rising
An unexpected discovery of a new mineral deposit will cause the
A. demand curve to shift outward. B. demand curve to shift inward. C. supply curve to shift outward. D. supply curve to shift inward.