To maintain a fixed exchange rate via intervention in the markets, a government should:
a. be ready to crack down on illegal traders.
b. be ready to buy the home currency with foreign currency reserves when the home currency's value declines.
c. be ready to sell the home currency when the home currency's value declines.
d. be ready to borrow funds from international banks when the home currency's value declines.
Ans: b. be ready to buy the home currency with foreign currency reserves when the home currency's value declines.
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A debtor nation means a nation
A) whose imports exceeds its exports. B) whose current account is less than its capital account. C) who—through its history—has invested less in the rest of the world than other countries have invested in it. D) whose current lending to the rest of the world exceeds its borrowing from the rest of the world.
The above figure shows Bobby's indifference map for juice and snacks. Assuming income remains unchanged, when the budget line rotates out, the expenditure on snacks
A) increases. B) decreases. C) does not change. D) Not enough information
According to your text, which of the following countries has experienced the highest annual per capita Gross Domestic Product (GDP) growth rate since 1970?
A) China B) Japan C) Germany D) United States
At the beginning of a year, decision makers expect the general level of prices to increase at a 3 percent annual rate. The CPI increases from 150 to 154.5 during the year; this is an example of
a. an inflation rate that is equal to 4.5 percent. b. an unanticipated increase in the general level of prices. c. an increase in the general level of prices that was accurately anticipated. d. an inflation rate that is less than what people anticipated.