A country with limited official reserves is better off pursuing fixed exchange rates.
Answer the following statement true (T) or false (F)
False
Official reserves are important under fixed exchange rates, because they may be needed for intervention in the foreign exchange market.
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In terms of accepting deposits and making loans, explain the differences between commercial banks and a central bank
What will be an ideal response?
An information is beneficial to the decision-maker only when:
a. its marginal cost is zero. b. its marginal benefits exceeds its marginal cost. c. the possibility of inaccurate transmission is nullified. d. its marginal benefit is positive.
To reduce structural unemployment, a nation should focus on:
a. Changing the exchange rate so more can be exported and less imported. b. Improving educational opportunities and job training c. Increasing government spending for the military. d. Cutting income taxes. e. All the above.
Suppose a tax of $3 is imposed on each new garden hose that is sold, resulting in a deadweight loss of $22,500 . The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. Before the tax was imposed, the equilibrium quantity of garden hoses was 100,000 . We can conclude that the equilibrium quantity of garden hoses after the tax
is imposed is a. 75,000. b. 85,000. c. 90,000. d. 95,000.