If the fundamental value of the nominal exchange rate equals 0.20 U.S. dollars per franc, but the franc is officially fixed at 0.15 U.S. dollars per franc, then the franc exchange rate is ________ and to maintain this exchange rate there will be ________ in the government's stock of international reserves.
A. undervalued; a net increase
B. undervalued; a net decline
C. overvalued; a net increase
D. overvalued; a net decline
Answer: A
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Refer to Figure 15-5. If the monopolist charges price P* for output Q*, in order to maximize profit or minimize loss in the short run, it should
A) continue to produce because price is greater than average variable cost. B) shut down because price is greater than marginal cost. C) continue to produce because a monopolist always earns a profit. D) shut down because price is less than average total cost.
The US Navy determines that the navigation system on its submarines, which use low-frequency radio waves, is reducing the population of humpback whales. The is an example of
A. marginal thinking. B. comparative advantage. C. the market mechanism. D. the Phillips curve. E. an externality.
The demand for Ben & Jerry's ice cream is ________ than is the demand for all ice cream because ________.
A. more price elastic; Ben & Jerry's has fewer available substitutes B. more price elastic; the scope of the market for Ben & Jerry's is less broadly defined C. less price elastic; the scope of the market for Ben & Jerry's is less broadly defined D. less price elastic; Ben & Jerry's has fewer available substitutes
The barrier to entry that sustains a natural monopoly is:
A. economies of scale. B. implicit price fixing agreements. C. government regulation. D. patent protection.