Explain what is meant by a revaluation of a currency. Under what circumstances would a country devalue its currency?
What will be an ideal response?
In a fixed exchange rate system, a country faces a balance of payments surplus when the demand for its currency exceeds the supply at the fixed exchange rate. The country can increase the value at which the currency is pegged to reduce its net exports; this is called a revaluation. The opposite would be the case for a devaluation.
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The rutabaga market is perfectly competitive. Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases. The permanent decrease in demand results in a
A) lower price, economic losses by rutabaga farmers, and entry into the market. B) lower price, economic losses by rutabaga farmers, and exit from the market. C) higher price, economic profits for rutabaga farmers, and entry into the market. D) higher price, economic losses by rutabaga farmers, and exit from the market. E) lower price, economic profits for rutabaga farmers, and entry into the market.
If the Federal Reserve purchases $1 million in government securities in the open market, with a 25 percent required reserve ratio on deposits, the maximum increase in deposits would be
a. $4 million. b. $10 million. c. $25 million. d. -$4 million. e. none of the above
Explain the sequence of events that occurs in the economy once total production (TP) is less than total expenditure (TE)
The more bowed out the Lorenz curve is, the
A) more equal the distribution of income. B) less equal the distribution of income. C) richer the society. D) poorer the society.