The social rate of discount is best approximated by:
a. the cost of government borrowing
b. the opportunity cost of resources taken from the private sector
c. 3 percent
d. 30 percent
e. none of the above
b
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Which of the following transactions is NOT recorded in the capital and financial account?
A) foreign investment in the United States B) U.S. investment abroad C) statistical discrepancy D) net interest income
A fixed exchange rate is an exchange rate whose value:
A. reflects the comparative advantage of the home country versus other foreign countries. B. is established annually by the International Monetary Fund. C. varies according to supply and demand for the currency in the foreign exchange market. D. is set by official government policy.
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.
If it's possible to eliminate the problems created by externalities, why do they persist?
A. Creating a more efficient solution does not mean it will have a fair distribution of that surplus. B. It can be difficult to coordinate the millions of market participants. C. They can be diffuse, complex, and hard to control. D. All of these statements are true.