Exchange rates that are allowed to fluctuate in the open market in response to changes in supply and demand are known as
A. fixed exchange rates.
B. flexible exchange rates.
C. gold exchange rates.
D. IMF exchange rates.
Answer: B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Wage differences can be explained by all of the following except
A) economic discrimination. B) differences in marginal revenue products. C) compensating differentials. D) comparable worth.
Consider a two-good production economy in which both goods are produced with fixed proportions production functions. Then, some efficient allocations will exhibit unemployment of some factor providing:
a. the firms use the inputs in different proportions. b. the firms exhibit diminishing returns to scale. c. the firms exhibit increasing returns to scale. d. production can never be efficient if there are unemployed inputs.
In the long run, when an increase in the quantity of output decreases average total cost, this is called:
A. economies of scale. B. diseconomies of scale. C. constant economies to scale. D. minimum average total cost.