Which of the following events is least likely to take place under a fixed exchange rate system?
A) an increased volume of trade because of a decline in exchange rate volatility
B) increased cross-border capital flows
C) increase in cost of trade because of higher transaction costs
D) increased cross-border labor flows in integrated economies
Ans: C) increase in cost of trade because of higher transaction costs
You might also like to view...
Use the following diagram for the corn market to answer the question below. If the price in this market is fixed at $2 per bushel, then
A. buyers will find too much corn in the market. B. buyers will be able to get as much corn as they wish to buy. C. sellers will not be able to sell all the corn that they intended to sell. D. sellers will quickly run out of corn that they bring to market.
The concept of "the invisible hand" suggests that
A) products are produced out of a seller's sense of charity. B) when the seller is better off, the buyer is worse off. C) sellers exploit consumers with high prices. D) buyers and sellers are self-interested. E) the command system is the only way of efficiently allocating resources.
A permanent reduction in planned real investment spending leads to
A) a more than proportional increase in real GDP. B) a more than proportional decrease in real GDP. C) a less than proportional decrease in real GDP. D) a proportional decrease in real GDP.
Economists use the term "business cycle" to refer to
a. the growth of small businesses into major corporations. b. changes in products that occur from improved technology. c. fluctuations in the level of real output and employment. d. periods of increases and decreases in the rate of inflation.