Compared with a system of fixed exchange rates, currency unions have the disadvantage of
A. requiring every country to share a common fiscal policy.
B. decreasing the sacrifice ratio.
C. allowing exchange rates to float.
D. requiring all its members to share a common monetary policy.
Answer: D
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A) downward-sloping; large B) downward-sloping; small C) upward-sloping; small D) either downward or upward-sloping; small
Critically evaluate the following statement. "I am definitely in favor of free trade but only if it means fair trade."
What will be an ideal response?
An increase in demand could be caused by
a. a decrease in price b. a decrease in income, assuming the good is inferior. c. buyers expecting the price of the good to fall in the near future. d. an increase in the price of a complement.
A monopoly whose monopoly power is based on its exclusive access to a resource is always threatened by the possibility of
a. technological change b. patents c. economies of scale in production d. new firms entering the industry e. its position as a natural monopoly