The ________ effect suggests that speculations can sometimes be destabilizing as the actions of international investors move the exchange rate away from the long-run equilibrium value consistent with fundamental economic influences.
A. overshooting
B. arbitrage
C. exchange rate
D. bandwagon
Answer: D
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Tom's marginal utility of Mountain Dew exceeds his marginal utility of crackers at his consumer equilibrium. Therefore, his consumer surplus from Mountain Dew must exceed his consumer surplus from crackers
Indicate whether the statement is true or false
If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan, then it implies that:
a. purchasing power parity exists. b. the foreign exchange market is in equilibrium. c. the dollar/yen exchange rate is fixed. d. interest rate parity exists. e. both the currencies are pegged to a fixed amount of gold.
Restricting imports into a small country by the government
A. increases the general welfare of the importing nation. B. protects domestic producers from foreign competition. C. increases consumer welfare in the country. D. all of the above.
GDP excludes expenditures by:
A. businesses on pollution control equipment. B. business for travel and entertainment. C. consumers on used automobiles. D. government on military hardware.