The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad.
B. stabilizing the exchange rate against external shocks.
C. stabilizing the interest rate against foreign capital outflows.
D. promoting long term economic growth.
Answer: B
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Suppose Hanna spends her entire budget buying bagels and cups of coffee each day. Also, suppose the marginal utility of her last bagel is 100 and the marginal utility of her last cup of coffee is 200
If the price of a bagel is $4 and the price of a cup of coffee is $2, then A) Hanna needs to decrease her consumption of bagels to maximize her utility. B) Hanna needs to increase her consumption of bagels to maximize her utility. C) Hanna should buy half as many bagels as coffee in order to maximize her utility. D) bagels must provide more total utility than coffee.
Suppose that Venezuela experiences significant capital outflows after a recent election. If the nation had flexible exchange rates, these flows would have had the following effect on the nation's financial account and reserves account
a. Financial account would rise and reserves account would fall. b. Financial account would not change and reserves account would fall. c. Financial account would fall and reserves account would not change. d. Financial account would fall and reserves account would fall. e. Financial account would fall and reserves account would rise.
An industry is likely to be an increasing-cost industry when
a. all firms are identical. b. it represents a negligible fraction of the total demand for inputs. c. industry expansion permits the development of supporting subindustries. d. some firms are more efficient than others.
Banks in the United States have been prohibited from investing deposits in significant equity holdings since the passage of the
A) Bank Reform Act of 1980. B) Securities and Exchange Acts of 1933 and 1934. C) National Banking Acts of 1863 and 1864. D) Sherman Antitrust Act of 1890.