If two countries choose to fix the exchange rates among their currencies, then
A. the country with a current account surplus can decrease its money supply to delay the need for intervention.
B. there usually is more pressure on the government whose country has an overall payments surplus than on the government whose country has an overall payments deficit.
C. the country with a lower rate of inflation will eventually have large current account surpluses.
D. both countries will have an inflation rate of zero.
Answer: C
You might also like to view...
Which goods would usually be an inferior good?
a. Steak b. Generic beer c. Theater tickets d. French wines
When aid is in the form of free or remarkably reduced priced goods, it is known as:
A. goods in-kind donations. B. consumable donations. C. freebies. D. direct donations.
Many economists think that effective institutions are essential for economic growth. In this context, what are institutions?
A. government agencies like the Food and Drug Administration (FDA) or the Environmental Protection Agency (EPA) B. mechanisms that allow for the use of fiscal and monetary policy C. the laws, social norms, and conventions of a culture D. prisons, jails, and psychiatric hospitals that are used to keep certain people isolated from the rest of the population E. long-standing companies that consumers can depend on for reliable service and products
For inferior goods
A. the substitution and income effects of a price increase will both decrease the quantity of the good demanded. B. the substitution effect of a price increase will decrease the quantity of the good demanded while the income effect of a price increase will increase the quantity of the good demanded. C. the substitution and income effects of a price increase will both increase the quantity of the good demanded. D. the substitution effect of a price increase will increase the quantity of the good demanded while the income effect of a price increase will decrease the quantity of the good demanded.