Explain how BOP disequilibrium is restored under
(a) flexible exchange rates.
(b) fixed exchange rates, after you define what a BOP disequilibrium means.
(a) It is restored by exchange rate changes causing traded good price changes.
(b) By allowing a devaluation or using trade restrictions or else central banks must finance deficits.
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The above figure shows the U.S. market for wheat. With international trade, U.S. consumers buy ________ tons of wheat and U.S. producers produce ________ tons of wheat
A) 500,000; 500,000 B) 300,000; 500,000 C) 300,000; 700,000 D) 700,000; 300,000 E) 500,000; 700,000
If reserves in the banking system increase by $100, then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio is
A) 0.01. B) 0.10. C) 0.05. D) 0.20
For a resource to be able to generate temporary competitive advantage over rivals, it must be
a. Valuable b. Rare c. Valuable and rare d. Not valuable but rare
Suppose a bank has $500,000 in deposits and a required reserve ratio of 10 percent. Then required reserves are
A. $50,000. B. $500,000. C. $5,000,000. D. $10,000.