There is an exchange rate between
A. every pair of currencies.
B. the world’s major currencies but not between the currencies of less-developed countries.
C. currencies on a fixed exchange rate system but not for those on a floating rate system.
D. the currencies of the European Union but not for the nations outside the European Union.
Answer: A
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Marginal utility theory predicts that as the price of coffee rises, the ________ a substitute for coffee ________ and the ________ coffee ________
A) supply of; increases; demand for; decreases B) supply of; decreases; supply of; increases C) demand for; increases; quantity demanded of; decreases D) demand for; decreases; demand for; increases
An individual insured against a particular cost, a. has reduced incentives to take precautions against those costs. b. may take on additional risk because he/she is insured
c. faces incentives that can result in higher insurance rates. d. All of the above are true.
Suppose that deposit insurance were reduced to a maximum of $50,000 per account (instead of $250,000). This would address the specific market imperfection of
a. externalities. b. imperfect information. c. rent seeking. d. moral hazard.
Which of the following is an example of an automatic stabilizer?
A. The reduction in the money supply that occurs as banks become less willing to make loans during a recession B. The reduction in real wages that occurs as the economy goes into a recession C. The increase in government spending that occurs as the result of new spending bills passed by Congress D. The rise in tax revenue that occurs as a result of growth in real GDP