What brought about the end of the Bretton Woods Agreement?
What will be an ideal response?
Under the Bretton Woods Agreement, the dollar was tied to gold and the exchange rates of all other currencies were fixed relative to the dollar. Countries had to maintain their exchange rate within one percent of the officially determined value. They would use dollars or other official reserves to maintain the exchange rate. The fixed exchange rate could be changed if there was a fundamental disequilibrium. Beginning in the late 1960s, the dollar was under pressure and the old IMF system ended when the dollar was devalued in 1971, followed by a floating exchange rate system in 1973.
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How are the fundamental economic questions answered in a market economy?
A) Large corporations alone decide the answers. B) Households and firms interact in markets to decide the answers to these questions. C) Individuals, firms, and the government interact in markets to decide the answers to these questions. D) The government alone decides the answers.
One benefit of a swap compared to futures and options is that they
A) promote liquidity. B) reduce the risk for both the buyer and seller. C) can be better tailored to meet the needs of market participants. D) can involve financial instruments and not just commodities.
When a firm has maximized profits
A) it has also minimized total costs. B) the marginal product of each input is also maximized. C) the marginal physical product is greater than the input price for all inputs. D) its marginal cost is zero.
Suppose that McDonald's successfully implements self-serve kiosks in their restaurants, and this investment in technology allows the company to reduce the number of employees at each location. All else equal, this technological improvement would ________
the equilibrium price for its products and ________ the equilibrium quantity consumed. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease