Speculation in exchange markets is often thought of as conducive to wild fluctuations in exchange rates. In practice it appears that speculators
A. have destabilized several currencies that were at sustainable equilibrium levels.
B. have no effect in fixed rate systems.
C. in fact tend to stabilize exchange rates rather than destabilize them.
D. All of the above are correct.
Answer: C
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By specialization and trade, two individuals can
A) consume at a point beyond their individual production possibilities frontiers. B) increase their comparative advantage. C) increase their absolute advantage. D) shift their individual production possibilities frontiers outward.
Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. If the price of a magazine is $5 and the price of a chocolate bar is $2
50, which of the following combinations maximizes Sonya's utility? A) 1 magazine and 18 chocolate bars B) 2 magazines and 20 chocolate bars C) 3 magazines and 14 chocolate bars D) 5 magazines and 10 chocolate bars
Patterns of interregional trade are primarily determined by ________ rather than ________ because factors of production are generally ________
A) external economies; natural resources; mobile B) internal economies; external economies; mobile C) external economies; population; immobile D) internal economies; population; immobile E) population; external economies; immobile
Under the adaptive expectations hypothesis, how will a shift to a more expansionary monetary policy affect the economy?
a. In the short run, the real rate of output will be unaffected, but in the long run, it will increase. b. In the short run, the real rate of output will increase, but in the long run, it will be unchanged. c. There will be a permanent increase in the real rate of output, but the inflation rate will also be a little higher. d. In the short run, the impact on the real rate of output is uncertain, but in the long run, output will increase.