Crawling pegs
A) are anti-inflationary because they require monetary discipline.
B) are designed to stabilize real exchange rates when domestic inflation is less than inflation in other nations.
C) reduce a nation's vulnerability to financial crises.
D) lead to undervaluation of the domestic currency.
A
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Economists use the term externalities to refer to
A) consequences people ignore in their decision making. B) any cost associated with an action. C) foreign imports or exports. D) the behavior in which people actually engage as distinct from their alleged reasons for acting as they do. E) the outside directors of a corporation as distinct from corporate directors who are also managers.
Figure 5-16
Figure 5-16 shows Adam’s purchases of bananas and apples when apples cost $5 each and bananas $4 each. The information implies that Adam’s income
A. must be $9. B. must be $20. C. must be $40. D. cannot be determined without further information.
Sarah gets a salary increase of 20 percent. Before her raise, she purchased 5 pounds of hamburger and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of hamburger and 3 pounds of beef stew a month. If everything else is held constant, we know that
A) hamburger is an inferior good and beef stew is a normal good for Sarah. B) hamburger is a normal good and beef stew is an inferior good for Sarah. C) both hamburger and beef stew are normal goods for Sarah. D) both hamburger and beef stew are inferior goods for Sarah.
If the market price of an option just before its expiration is $33 while its strike price is $29, arbitrage will determine a price for it that:
a. leaves an investor indifferent between buying the stock outright or buying an option and then exercising it. b. encourages the investor to buy the stock outright and sell it when the option expires. c. encourages the investor to buy an option and exercise it only after its expiration. d. encourages the investor to buy the stock outright and rewrite an option later.