After a speculative attack has been successful, and a country is forced to devalue its currency, it is common to see many local business firms driven to bankruptcy. This most commonly occurs because _____
a. nobody ever wants to invest in a country that just suffered a devaluation
b. many local firms took foreign loans (denominated in, say, dollars), and they cannot repay them at the new exchange rate
c. the WTO forces troubled firms to show profits or make way for new, more efficient firms
d. local firms cannot compete with their foreign competitors at the new prices after the devaluation
e. many local firms do not know how to deal with the complicated financial operations involved in a speculative attack
b
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In August 2006, the Canadian unemployment rate was 6.4 percent. In August 2008, the Canadian unemployment rate was 6.1 percent. Between August 2006 and August 2008, the number of job losers ________, the number of job leavers ________, and the number of entrants and reentrants ________.
A) decreased; did not change much; decreased B) decreased; increased; increased C) decreased; decreased; increased D) decreased; increased; decreased E) did not change much; increased; increased
A political system that promotes the free and open exchange of ideas:
A. increases average labor productivity. B. slows the development of new technologies and products. C. will not have well-defined property rights. D. is detrimental to economic growth.
Ceteris paribus, a leftward shift of the aggregate supply curve will cause the equilibrium price level to _______ and equilibrium real output to _______.
A. Increase; increase B. Increase; decrease C. Decrease; increase D. Decrease; decrease
Exhibit 14A-1 Aggregate demand and supply model
Beginning from long-run equilibrium at point E1 in Exhibit 14A-1, the aggregate demand curve shifts to AD2 . The real GDP and price level (CPI) in short-run equilibrium will be:
A. $12 billion and 200. B. $8 billion and 250. C. $8 billion and 150. D. $12 billion and 250.