What are the general conditions under which a fixed exchange rate makes sense for a country?
What will be an ideal response?
A fixed exchange rate makes sense for a country that has a poor reputation for controlling inflation on its own. The country's economy should also be well integrated with the economy of the country they are fixing their exchange rate with, including significant trade with the country and a close positive correlation with its macroeconomic fluctuations. Finally, the country needs to have a high level of foreign exchange reserves.
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Demand for Snickers bars will decrease if:
A. the price of Snickers bars decreases. B. a news story claiming 95% of all geniuses eat at least one Snickers bar a day is released. C. the price of Milky Way bars (a substitute) decreases. D. the price of Milky Way bars (a substitute) increases.
A firm sells 1000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65 . At what price would the firm consider shutting down in the short run?
a. $10 b. $25 c. $65 d. $70
"Hicks' Third Law of Demand" states that "most" goods must be:
a. gross substitutes. b. gross complements. c. net substitutes. d. net complements.
Less-risky professions tend to enjoy compensating wage differentials
a. True b. False