If a lower exchange rate spurs exports then why wouldn't it be a good idea of policymakers to intervene to push the exchange rate as low as they can?
What will be an ideal response?
If a lower exchange rate were the key to growing exports then policymakers could simply push the exchange rate so low that the currency becomes worthless. In this case if would be difficult to see why anyone would continue to accept this nation's currency for payment of goods. Eventually this policy would have the opposite effect and exports would decline. At the same time the lower value of the currency would require consumers to pay even more for imported goods.
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What are the implications of the quantity theory of money for monetary policy and price stability?
What will be an ideal response?
If the saving rate decreases, break-even investment will be ________ than investment, and the capital-labor ratio will ________
A) greater; increases B) greater; decreases C) less; increases D) less; decreases
Workers in the U.S. economy get most of their skill training in school
Indicate whether the statement is true or false
Inflation
a. causes people to spend more time reducing money balances. When inflation is unexpectedly high it redistributes wealth from lenders to borrowers. b. causes people to spend more time reducing money balances. When inflation is unexpectedly high it redistributes wealth from borrowers to lenders. c. causes people to spend less time reducing money balances. When inflation is unexpectedly high it redistributes wealth from lenders to borrowers. d. causes people to spend less time reducing money balances. When inflation is unexpectedly high it redistributes wealth from borrowers to lenders.