In general, which of the following is NOT a characteristic of a fixed exchange rate regime as defined by the text?
a. Capital is mobile.
b. Exchange rates are determined by the market in the short run.
c. Arbitrage is free to operate.
d. Government takes an active role in foreign currency market intervention.
Answer: b. Exchange rates are determined by the market in the short run.
You might also like to view...
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Keynesians believe that
A) the link between money and aggregate demand is very strong. B) interest rates will immediately respond to a change in investments. C) fluctuations in the price level are a source of stability. D) the interest rate will not necessarily respond to a drop in investments.
Legal reserve requirements specify that banks must hold a certain percentage of their deposit liabilities
a. in currency only. b. as deposits at regional Federal Reserve Banks only. c. either in currency or as deposits at regional Federal Reserve Banks. d. None of the above
You want to run a difference-in-difference experiment with a price increase for your lawn chairs in Miami, FL. If you are worried about the "representativeness" of your control group, a good comparison city would be
a. Boston, MA b. San Francisco, CA c. St. Paul, MN d. Tampa Bay, FL