Why might a developing country choose to peg the value of its currency to the dollar?
What will be an ideal response?
The dollar is a relatively stable currency, so by pegging the value of a country's currency to the dollar, the country provides reassurance that debts will be paid in a currency whose value doesn't fluctuate dramatically. This reduces the risk foreigners face in collecting returns on investments in that country. In addition, if imports are a significant fraction of the goods consumers buy, a decrease in the value of the country's currency can result in higher inflation. By pegging the country's currency, these fluctuations in the exchange rate don't occur, so inflation may be lower.
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In what sense is tariff escalation protectionist? What alternatives exist for remedying this problem?
What will be an ideal response?
In the 1970s, the U.S. experienced stagflation. What is stagflation?
a. Low inflation and low unemployment b. Low inflation and high unemployment c. High inflation and high unemployment d. High inflation and low unemployment
The Department of Justice could use the cross-price elasticity between products sold at Staples and Office Max to show that the firms are very similar.
Answer the following statement true (T) or false (F)
Which of the following represents the relationship between disposable income (DI), consumption (C), and saving (S)?
A. DI = C * S B. DI = C + S C. DI = C - S D. DI + C = S