Under fixed exchange rates, which one of the following statements is the MOST accurate?
A) Devaluation causes a rise in output.
B) Devaluation causes a decrease in output.
C) Devaluation has no effect on output.
D) Devaluation causes a rise in output and a decrease in official reserves.
E) Devaluation causes a decrease in output and in official reserves.
A
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Refer to the scenario above. If India wants to repay a lower sum of money to the U.S., it should:
A) peg the exchange rate below 50 rupees per dollar. B) peg the exchange rate to 60 rupees per dollar. C) continue to use a flexible exchange rate regime. D) peg the exchange rate to 70 rupees per dollar.
A possible solution to the problems of external benefits is
A) to tax those receiving the extra benefits. B) production of the good by government. C) effluent fees. D) to restrict the amount of the good through direct government regulation.
The law of demand holds
A. for individuals, but not for markets. B. for markets, but not for individuals. C. for both individuals and for markets. D. for neither individuals nor for markets.
Salary smoothing, automatic payroll deductions, and early withdrawal penalties are all examples of:
A. mechanisms imposed by companies to extract more from their workers and customers. B. policies that do not fundamentally alter decisions because they do not change the benefits or costs of an action. C. precommitments. D. hardwired heuristics.