The nominal exchange rate is the
a. nominal interest rate in one country divided by the nominal interest rate in the other country.
b. the ratio of a foreign country's interest rate to the domestic interest rate.
c. rate at which a person can trade the currency of one country for another.
d. the real exchange rate minus the inflation rate.
Ans: c. rate at which a person can trade the currency of one country for another.
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Under a laissez-faire system,
A. government organizes production and distribution of goods. B. a small bureaucracy of central planners tells firms what to produce and how to produce it. C. costs of production and consumers’ demands determine the output mix. D. firms try to produce the goods that they think are good for consumers.
When countries engage in specialization and international trade, every individual person in those countries will gain
Indicate whether the statement is true or false
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. recessionary gaps. C. exogenous spending. D. expansionary gaps.
An import quota is
A. a price floor. B. a quantity restriction. C. a price ceiling. D. a direct tax on imports.