If a country with a fixed exchange rate faces a fundamental disequilibrium because it has a large, ongoing surplus in its official settlements balance, which of the following policies can it employ to try to achieve external balance?
A. Allow the exchange rate to float
B. Impose import barriers
C. Obtain a loan from the IMF
D. Raise interest rates
Answer: A
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If the US interest rate is 4% per year and the Mexico interest rate is 9% per year, which of the following is true:
a. The dollar will depreciate 5% in one year. b. The peso will appreciate 9% in one year. c. The peso will depreciate 5% in one year. d. The dollar will appreciate 9% in one year.
Suppose the marginal propensity to consume in an economy is 0.9. What would be the Keynesian multiplier in this economy?
Select one: a. 0.1 b. 2 c. 5 d. 10
A move from S4 to S3 is a(n)
A. an increase in quantity supplied.
B. a decrease in quantity supplied.
C. an increase in supply.
D. a decrease in supply.
If the demand for salad dressing increases when the price of lettuce decreases, the cross-price elasticity of demand between salad dressing and lettuce will be ________ because these two goods are ________.
A. equal to 1; inelastic B. negative; substitutes C. negative; complements D. zero; inferior