A country that suffers from bouts of high inflation and wants to fix its exchange rate should tie its currency to the currency of a:
A. larger country.
B. country with similar inflation performance.
C. country that is still on the gold standard.
D. country with a strong reputation for low inflation.
Answer: D
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The calculation of the final goods and services sold in an economy would NOT include
A) the purchase of a lawnmower by a household. B) General Motors' purchases of tires for new automobiles. C) Ford Motor Company's purchase of a new industrial robot to be used to produce cars. D) the purchase of a service by a household.
Monetary policy loses its effectiveness in all of the following situations EXCEPT
A) when the IS curve is vertical. B) when the LM curve is nearly horizontal. C) when interest rate controlled by the Fed reaches zero. D) when the IS curve is horizontal.
The new Keynesian model has ________ in common with the real business cycle model
A) wage and price stickiness B) a theory of aggregate demand C) procyclical inflation D) a microeconomic foundation
Some countries have had relatively high inflation and relatively high unemployment for long periods of time. Is this consistent with the Phillips curve? Defend your answer