Which of the following statements about dollarization is accurate?
A. Dollarization enables a country to counteract more effectively adverse foreign shocks without otherwise disrupting the country's economy.
B. A country that dollarizes gains interest income on what had been the country's holdings of international reserve assets.
C. Dollarization decreases exchange-rate risks by removing the risks of speculative attacks on its currency.
D. A country that chooses to dollarize will enhance its control over its monetary policy.
Answer: C
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In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost
A) highest; highest B) lowest; lowest C) highest; lowest D) lowest; highest
The quantity theory of money assumes that
A) the velocity of money is constant. B) the velocity of money is negative. C) the velocity of money fluctuates unpredictably. D) the velocity of money is zero.
Suppose that the price of gasoline doubles overnight. Why is the short-run price elasticity of demand for gasoline different from the long run?
Anna is expecting a child but has decided that she is not ready to be a mother. She chooses to sell her newborn to Bob and Sue, a couple who have been unable to conceive a child of their own but want one desperately. This is an example of a trade that:
A. should be permitted as long as each party enters into the agreement voluntarily. B. may benefit each party but may not be permitted in a society that believes selling babies is morally wrong. C. would never be permitted in any society. D. may benefit each party but cannot be considered efficient.