What is the difference between a sterilized and non-sterilized central bank intervention in the foreign exchange market?
What will be an ideal response?
A sterilized central bank intervention in the foreign exchange market does not affect the domestic money supply whereas a non-sterilized intervention would affect the domestic money supply.
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If a detrimental externality is being produced in the course of producing a good, then
a. P > MSC. b. MSC < MPC. c. incidental costs are negative. d. output is inefficiently large.
During a war, governments will sometimes draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?
a. the value of the civilian goods no longer produced by the new soldiers b. the cost of feeding and clothing the new soldiers c. the dollar cost of the payroll d. the higher prices of civilian goods due to wartime shortages e. the cost of transporting the soldiers to combat
The primary source of purchasing power used to buy imported goods is
What will be an ideal response?
A country is most likely to have a comparative advantage in the production of cars if:
A. its citizens prefer driving cars to other forms of transportation. B. it imports most of the raw materials necessary to produce cars. C. it has strict environmental protection laws governing automobile emissions. D. it has a relative abundance in the natural resources needed to produce cars.