Lower transaction costs are a benefit of fixed exchange rates. Therefore, relative prices in two trading nations linked by fixed exchange rates should:
A) experience more price divergence.
B) experience more price convergence.
C) have less arbitrage and more speculation.
D) have lower costs of production.
Ans: B) experience more price convergence.
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Assuming that the government can act immediately before the multiplier takes effect, then to offset an increase in investment by $1 billion, government purchases must be:
A. decreased by $2 billion. B. increased by $1 billion. C. decreased by $1 billion. D. decreased by $0.5 billion.
In surveys about inflation during the 1990s, what percentage of professional economists answered “Fully agree” that preventing high inflation was a highly important national priority?
a. 18% b. 33% c. 52% d. 75%
Individuals cannot buy unemployment insurance for themselves. The most likely reason for this is
a. moral hazard. b. imperfect information. c. a culture of poverty. d. the free-rider problem.
Jose owns his own business. The first three employees can create 10, 12, and 11 widgets per hour. When Jose hires the 4th worker the total production from all employees increased to 40 total widgets per hour. What was the marginal product of the 4th worker?
A. 13 widgets B. 10 widgets C. 33 widgets D. 7 widgets