Does it appear that currency boards make fixed exchange rates credible?
What will be an ideal response?
No, because is prohibited by law from acquiring any domestic assets, so all the currency it issues automatically is fully backed by foreign reserves. Also countries that adopt currency board, do it because one of the mayor advantage aside from the constrain it places on fiscal policy, central bank can never run out of foreign exchange reserves in the face of a speculative attack on the exchange rate. So the currency board cannot fix exchange rates.
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Sue's Sea Shells by the Sea Shore is a perfectly competitive firm selling sea shells at the market price of $2 per dozen. Sue's Sea Shells by the Sea Shore has fixed costs of $40 per day and a variable cost schedule in the table above
The profit-maximizing level of output for Sue's Sea Shells by the Sea Shore is A) 202 dozen sea shells by the sea shore per day. B) 204 dozen sea shells by the sea shore per day. C) 205 dozen sea shells by the sea shore per day. D) 206 dozen sea shells by the sea shore per day.
An equilibrium in a game in which players pursue their own self-interests and do not cooperate is called a
A) dominant strategy equilibrium. B) prisoner's dilemma equilibrium. C) noncooperative equilibrium. D) cartel equilibrium.
The reason that the multiplier is smaller if there are variable taxes is that
A. taxes add to government spending, which increases income. B. people get angry about taxes and decide to work less. C. tax increases shift the expenditure line upward. D. part of an increase in income is taken away in taxes.
Theater owners often stop their discounts when they show an extremely popular movie because
What will be an ideal response?