When exchange rates are__ , agreeing to wait for one week from today to engage in an international transaction carries __
a. flexible rather than fixed; less risk
b. flexible rather than fixed; the same amount of risk
c. flexible rather than fixed; more risk
d. fixed rather than flexible; the same amount of risk
Ans: c. flexible rather than fixed; more risk
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Keynes and his followers believed that
A) the economy could not operate at any level of real Gross Domestic Product (GDP) less than full capacity. B) capitalism was one economic system that guaranteed full employment. C) wages and prices in the short run were flexible. D) there was no guarantee that a capitalist economy would reach a full employment equilibrium.
In the economic way of thinking, speculation can only occur
A) in a capitalist economy. B) in a society where time-travel is possible. C) under uncertainty. D) under perfect information. E) in an underground or illegal market system.
In the economic way of thinking, a wetland is a scarce good. Thus,
A) there is a substitute for a wetland. B) there is no substitute for a wetland. C) wetlands should be preserved at any cost. D) wetlands can be preserved at no cost. E) economists don't like wetlands.
The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. For firm B,
A) setting a high price is the dominant strategy. B) setting a low price is the dominant strategy. C) there is no dominant strategy. D) doing the opposite of firm A is always the best strategy.