Explain what is a "vehicle currency." Why is the U.S. dollar considered a vehicle currency?
What will be an ideal response?
A vehicle currency is one that is widely used to denominate international contracts made by parties who do not reside in the country that issues the vehicle currency. Since in 2004, nearly 90 percent of foreign exchange transactions involve exchanges of foreign currencies for U.S. dollars; therefore, it is considered a vehicle currency.
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The government expenditure multiplier is used to determine the
A) amount aggregate supply is affected by a change in government expenditure. B) amount aggregate demand is affected by a change in government expenditure. C) extra scrutiny government action receives. D) amount private consumption is decreased by government expenditure. E) extent to which automatic stabilizers must be changed in order to avoid recessions.
Starbucks sells coffee in both New York City and in rural upstate New York. The price of coffee is higher in New York City
This fact means that the value of marginal product of land is ________ in New York City and so Starbucks is willing to pay a ________ rent in New York City. A) lower; lower B) higher; lower C) lower; higher D) higher; higher
Computing the CPI is important because it provides ________
A) a rough measure of the cost of living B) it is used as a benchmark in labor negotiations C) government uses it to index entitlements, such as social security benefits, so that beneficiaries do not lose purchasing power in periods of inflation D) all of the above E) none of the above
Supply-siders feel that high levels of government spending:
a. assist private sector investing by creating infrastructure. b. have no impact on private sector investment. c. complement private spending. d. cause private sector investment to decline because of crowding out. e. cause private sector spending to decrease because of increases in corporate taxes to finance the government spending.