A typical IMF stabilization package involves
(a) erecting barriers against foreign investment.
(b) overvaluing the exchange rate.
(c) liberalization of exchange controls.
(d) a reduction in interest rates.
(e) all of the above.
C
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An example of a commitment device would be:
A. a swear jar that you and your friends agree must be paid $5 each time someone swears. B. putting a note on the cookie jar that you want to lose weight. C. buying yourself an ice cream after going to the gym. D. All of these are examples of commitment devices.
The consumption schedule shows the relationship of household consumption to the level of:
A. Saving B. Investment C. Disposable income D. The marginal propensity to consume
Over twenty years ago the city of Washington D.C. was facing a budgetary shortfall. In a plan to increase tax revenue the mayor and city council agreed to raise the excise tax on gasoline
Typically for goods like gasoline which are price inelastic this should have led to an increase in tax revenue. However, just the opposite happened – tax revenue plummeted! What could explain this seemingly paradoxical result?
What is meant by risk neutrality?
What will be an ideal response?