What is the drawback for a country that chooses to fix its exchange rate?
a. Fixing the exchange rate can deteriorate the international competitiveness because the real exchange rate can't fluctuate anymore.
b. Businesses in the country are more exposed to business risks associated with exchange rate changes.
c. The central bank loses its ability to influence the money supply, unless severe capital controls are imposed.
d. Fixing the exchange rate has no disadvantages and should be adopted by all countries.
.C
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Assuming all else equal, any change that causes a decrease in the credit supply at a given real interest rate will cause:
A) the credit supply curve to shift to the right. B) an upward movement along the credit supply curve. C) a downward movement along the credit supply curve. D) the credit supply curve to shift to the left.
Moving along an elastic portion of a demand curve, a small percentage change in price leads to a larger percentage change in quantity demanded
a. True b. False Indicate whether the statement is true or false
_______________—a term coined by Alexander Gerschenkron (1904–78) suggesting that a country that is behind has some extra potential for catching up.
a. Law of diminishing returns b. Convergence c. The advantages of backwardness d. Divergence
Gross domestic product for 2000 tries to measure the market value of all final goods and services produced in 2000 . But not everything produced in the economy gets onto the market
Indicate whether the statement is true or false