Many developing countries face a balance of payments constraint because:
A. they fail to implement exchange rate policy correctly.
B. they hold too few international reserves.
C. they hold too many international reserves.
D. the IMF forces them to adopt policies that are counterproductive.
Answer: B
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The quantity theory of money is a theory of how
A) the money supply is determined. B) interest rates are determined. C) the nominal value of aggregate income is determined. D) the real value of aggregate income is determined.
According to Classical interest rate theory, which of the following will decrease the equilibrium real interest rate?
A) A decrease in investment B) A decrease in saving C) An increase in money demand D) A decrease in money demand
For investors, commercial paper is a close substitute for
A) U.S. Treasury bills. B) U.S. Treasury bonds. C) corporate bonds. D) municipal bonds.
The towns of Jekyll and Hyde each have a labor force of 2,000 people. In Jekyll, 500 people were unemployed for the entire year, while the rest of the labor force was employed continuously. In Hyde, every member of the labor force was unemployed for three months and was employed for nine months. The average duration of unemployment spells over the year was ________ months in Jekyll and ________ months in Hyde.
A. 3; 9 B. 12; 3 C. 3; 3 D. 12; 9