Flexible exchange rates:
A. impose a greater degree of discipline on the behavior of central banks than fixed exchange rates do.
B. make it simpler to engage in international trade than fixed exchange rates do.
C. give governments a greater degree of flexibility in monetary policy than fixed exchange rates do.
D. produce smaller exchange rate fluctuations than fixed exchange rates do.
Answer: C
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The cultural hypothesis of economic growth claims that:
A) most of the ancient cultures of the world have almost been forgotten post-globalization. B) different values and cultural beliefs cause differences in prosperity around the world. C) a common global culture is automatically created through liberal trade practices. D) values and cultural beliefs are proximate causes for differences in prosperity around the world.
You have the choice of going on vacation to Florida for one week, staying at work for the week, or spending the week doing fix-up projects around your house. If you decide to go to Florida, the opportunity cost of the trip is
A) working and doing fix-up projects. B) working or doing fix-up projects, depending on which you would have done otherwise. C) working, because you would be giving up income. D) nothing because you will enjoy the trip to Florida.
A perfectly competitive firm is selling 300 units of output at $4 each. At this output level, total fixed cost is $100 and total variable cost is $500. The firm
A) is maximizing its profit. B) is earning a profit, but not necessarily the maximum profit. C) is experiencing an economic loss. D) should shut down.
Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency falls. b. The quantity of real loanable funds per time period falls, and nominal value of the domestic currency rises. c. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency remains the same. d. The quantity of real loanable funds per time period rises, and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.