If the equilibrium exchange rate exceeds the par exchange rate in the market for pounds, the pound is overvalued
Indicate whether the statement is true or false
FALSE
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If the U.S. government can run chronic budget deficits, why can't state governments do the same?
A) Conservatives have more power in state legislatures than in the U.S. Congress. B) Voters do not believe in budget deficits and they control state governments. C) Most states have no income tax. D) State constitutions require balanced budgets. E) States must rely on taxation for the funds to repay creditors.
The opportunity cost of holding currency decreases when
A) income decreases. B) the interest rate on bonds decreases. C) the interest rate on money decreases. D) wealth decreases.
In the absence of well-defined property rights, we would likely find
A. people with less incentives to take risks. B. increases in investment activity. C. higher economic growth rates. D. people with more incentives to take risks.
The "most-favored-nation" clause of reciprocal trade agreements:
A. outlaws tariffs on products for which an exporting nation has a comparative advantage. B. singles out a particular nation for exemption from an import quota. C. means that any tariff reductions the United States negotiates with a specific nation will automatically apply to many other nations. D. confers special trade privileges to nations in which the United States has military bases.