Briefly describe two systems for fixing the exchange rates of all currencies against each other and the time periods in which they were used
What will be an ideal response?
The first is to single cut one country's currency as the reserve currency. The other countries hold this reserve currency and fix their interest rate to it by standing ready to exchange domestic currency for the reserve currency. The U.S. dollar was the reserve currency from 1945 to 1973. The second is the gold standard in which central banks peg the prices of their currencies in terms of gold and hold gold as official international reserves. This was used between 1870 and 1914.
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Suppose the economy is in a long-run equilibrium when a temporary, favorable aggregate supply shock occurs. On the graphs above, show what happens to bring the economy back to long-run equilibrium, assuming that there is no policy response
In words, explain why "no response" is the best policy.
If you live in a state with a returnable deposit law and you decide to throw out your empty bottles and cans, chances are that someone down the line with a higher opportunity cost than you will find them and return them for deposits
a. True b. False
>By the transitivity property, if A > B and B > C then:
A. A ~ C B. A > C C. B ~ C D. A < C
In the high-growth Asian economies, inflation is kept under control and budget deficits and foreign debt levels are kept within the ability of the governments and the economies to handle them, which is quite different from the past experience of the Latin American region
Indicate whether the statement is true or false