A freely floating exchange rate exists when
a. governments set pegs for the exchange rate but occasionally adjust them.
b. offshore banks determine the exchange rate.
c. supply and demand forces are allowed to determine the rate at which currencies are exchanged for each other.
d. governments use international reserves only to influence exchange rates.
c. supply and demand forces are allowed to determine the rate at which currencies are exchanged for each other.
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On the island of Yap, 5 canoes have a value of one stone wheel known as a fei. What function of money do fei serve in this example?
A. store of value B. medium of exchange C. medium of deferred payment D. unit of account
The opportunity cost of deficit spending is likely to be low: a. only when it creates new physical capital
b. only when it creates new human capital. c. only when it improves existing physical capital. d. only when it improves existing human capital. e. when it creates or improves physical or human capital.
Average cost regulation of a natural monopoly: a. generates economic losses for the seller
b. necessitates a subsidy payment to the firm. c. creates incentives that tend to shift ATC curves in an upward direction. d. imposes a price that is less than marginal cost.
An increase in government spending by $100 would, if the MPC = 0.90, result in an increase in real GDP by:
A. $1,000. B. $9,000. C. $900. D. $190.