Critics of the current system of flexible exchange rates allege that it
a. promotes inflation
b. promotes unemployment
c. gives central banks too little discretion over their money supplies
d. restricts the growth of developing countries
e. gives too much financial power to industrial countries
A
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Which of the following is not an example of a group responding to an incentive?
a. Students attend class because of an attendance policy that reduces their grade for absences. b. Consumers buy more of a product when it is on sale at a reduced price. c. Universities offer fewer online classes when they generate more revenue than traditional classes. d. Employees work harder to earn higher commissions.
The price of one good compared to the price of other goods refers to:
A. Relative price. B. Inflation. C. Deflation. D. The income effect.
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.
International trade shocks
A. are of greater concern to large industrialized countries than to developing countries that rely on exporting a few primary commodities. B. can be avoided by moderate use of tariffs and non-tariff barriers. C. include changes in a country's total exports that result from changes in foreign consumer tastes. D. have no impact on the countries under fixed exchange-rate regimes.