Use a figure to explain how a balance of payments crisis and its hand in capital flight
What will be an ideal response?
Suppose the foreign exchange market expects the government to devalue the currency in the future and adopt a new fixed exchange rate > . This leads to a rightward shift in the curve that measures the expected domestic currency return on foreign currency deposits. Since the exchange rate remains fixed at , the domestic interest rate must rise to R* + ( - )/ . The central bank must sell foreign reserves and shrink the money supply in response. This reserve loss accompanying a devaluation scare is labeled capital flight.
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The kinked demand curve is composed of two segments of two demand curves that intersect. The two segments that make up the kinked demand curves are
a. both related to industry demand b. derived by subtracting the firm's demand curve from the market demand curve and adding it to the industry demand curve c. derived from the firm demand curve and the industry demand curve d. the least elastic segment above price and the more elastic segment below price e. the more elastic segment above price and the least elastic segment below price
Productive efficiency refers to:
A. Cost minimization, where P = minimum ATC B. Production at a level where P = MC C. Maximizing profits by producing where MR = MC D. Setting TR = TC
In games:
A. there is only one strategy associated with each outcome. B. there are several strategies that can achieve a single goal. C. all strategies followed in one particular game should all be similar in order to be successful. D. if one person's strategy is wildly different from those of others, he will typically come in first or last.
The World View article in the text titled "Income Share of the Rich" reports, "In poor, developing countries the richest tenth of the population typically gets 40 to 50 percent of all income." Which of the following is a form of government intervention designed to change this situation?
A. Spillover costs. B. Rich nations opening up their domestic markets to exports from poor nations. C. Antitrust laws. D. Laissez faire.