In a pure flexible exchange rate system, deficits and surpluses in the balance of payments:
a. are accommodated by financial borrowings.
b. are accommodated by reserve movements.
c. tend to disappear automatically
d. either b. or c.
c
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If a bank that is subject to a 10 percent required reserve ratio has $20,000 in excess reserves, it can make new loans of:
a. $2,000 b. $18,000. c. $20,000 d. $200,000.
Suppose the economy of Catalania is experiencing a recession and policy makers decide to implement an expansionary monetary policy. After the implementation of the policy, there is a considerable time gap before the effect of the policy on the major economic variables is noticed. This is an example of: a. the neutrality of money. b. an inflationary gap
c. an administrative lag. d. an operational lag.
According to the circular-flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates
a. in the markets for factors of production exchanging labor for income. b. in the markets for factors of production exchanging flowers for revenue. c. in the markets for goods and services exchanging flowers for wages, rent, and profit. d. in the markets for goods and services exchanging labor for income.
Which of the following conditions does not need to occur for a market to achieve allocative efficiency?
A. Consumers' maximum willingness to pay equals producers' minimum acceptable price for the last unit of output. B. The sum of producer and consumer surplus is maximized. C. The total revenue received by producers equals the total cost of production. D. The marginal benefit of the last unit produced equals the marginal cost of producing that unit.