Critics of flexible exchange rates argue that flexible rates:
a. reduce uncertainty in international trade
b. automatically create an equilibrium price for each currency in the foreign exchange market.
c. make nations more constrained in carrying out internal macroeconomic policies.
d. increase uncertainty in international trade.
d
You might also like to view...
An aggregate production function:
A) shows various combinations of labor and capital that can be used to produce a particular good. B) shows various quantities of two goods that can be produced at a given cost. C) shows the relationship between a country's GDP and its factors of production. D) shows the relationship between a country's output and its price level.
The equilibrium exchange rate is 0.70 euros per dollar. At this exchange rate, the quantity demanded equals the quantity supplied and is $1.3 trillion a day. If the exchange rate is now 0.60 euros per dollar, then
A) there is a shortage of dollars and the exchange rate rises. B) there is a shortage of dollars and the exchange rate falls. C) there is a surplus of dollars and the exchange rate rises. D) there is a surplus of dollars and the exchange rate falls. E) there is no change.
What are the Fed's three policy tools?
What will be an ideal response?
How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?
a. Most people who study economics are not very bright. b. Good economists must possess a rare combination of gifts. c. Economics is quite boring; hence, people tend to lose interest in it before mastering it. d. Good thinkers become frustrated with economics because it does not make use of the scientific method.