The appropriate "medicine" for correcting payments imbalances under a fixed exchange rate system is
a. inflation for deficit countries and recessions for surplus countries.
b. no change for surplus countries, tax cuts for deficit countries.
c. inflation for surplus countries and recessions for deficit countries.
d. sales of gold for deficit countries and revaluations for surplus countries.
c
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What could Keynes have meant by his now famous statement, "in the long run we are all dead?"
A) Government intervention is destabilizing, will lead to slower growth in the long run, and will prevent an economy from self-regulating. B) Government intervention in the economy is necessary in times of recession because an economy rarely restores itself to full employment. C) Government intervention in the economy is useless because it takes too long to take effect. D) Government intervention in the economy is only effective if it is not erratic.
How does total taxes as a percentage of GDP in the United States compare to those of Western European countries, such as the United Kingdom, Germany, and Sweden?
a. U.S. taxation is smaller. b. U.S. taxation is about the same. c. U.S. taxation is slightly larger. d. U.S. taxation is substantially larger.
When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation
a. True b. False Indicate whether the statement is true or false
If production in the economy is efficient, then changes in market prices
A. Move us to a point above the production possibilities curve. B. Have no effect on our position on the production possibilities curve. C. Move us along the edge of the production possibilities curve. D. Move us from a point below the production possibilities curve to a point on the production possibilities curve.