The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad.
B. stabilizing the exchange rate against external shocks.
C. stabilizing the interest rate against foreign capital outflows.
D. promoting long term economic growth.
Answer: B
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From the mainstream perspective, instability in the economy is due to
A. volatility of the labor supply. B. excessive use of government policies and regulation. C. volatility of the money supply. D. volatility of aggregate demand.
If the funding for a larger budget deficit comes from international financial investors, then a budget deficit may be accompanied by a
a. trade surplus. b. trade deficit. c. trade balance. d. Ricardian equivalence.
Identify the factors that affect elasticity of demand
What will be an ideal response?
Savings for an economy is equal to:
A. private savings + public savings. B. public savings ? private savings. C. investment ? net exports. D. private savings ? public savings.