Proponents of fixed exchange rates, who argue that these rates eliminate uncertainty and therefore promote international trade, sometimes fail to recognize that:
A. exchange rates do not matter to businesses, so the uncertainty has no impact.
B. fixed exchange rates are more volatile than flexible exchange rates.
C. fixed exchange rates may not remain fixed forever.
D. international trade is bad for the economy and should not be promoted.
Answer: C
You might also like to view...
Which of the following is not true of the demand deposit multiplier?
a. Its formula is 1/RRR. b. It represents the change in demand deposits generated by a change in reserves. c. It represents the change in demand deposits generated by a change in taxes. d. It is a way to determine the effect on money supply from a given Federal Reserve action. e. It ignores changes in the behavior of the public and the banks.
Who would describe economic growth by relating the level of investment to the changes in the level of national income?
a. market theorists b. housing cycle theorists c. innovation cycle theorists d. real business cycle theorists e. internal cycle theorists
Refer to Figure 5.1. In which graph does a shift from BL1 to BL2 represent an increase in the price of DVDs?
A. A
B. B
C. C
D. D
Because of the law of diminishing marginal utility, total utility of consuming any good or service
a. increases at a decreasing rate as we consume more of any good or service. b. decreases as we consume more of any good or service. c. stays the same. d. none of the above