Why does a government impose controls or restrictions on converting domestic currency to foreign currency (capital controls)?
a. The government is trying to stop the rapid decline in value of the domestic currency.
b. The government wants to speculate on its own currency
c. The government is trying to suppress international trade
d. The government is trying to avoid imposing taxes on citizens.
Ans: d. The government is trying to avoid imposing taxes on citizens.
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When the actions of a central bank induce actions from other banks in the country
A) the other banks are reacting to an announcement effect. B) the other banks are concerned about a penalty rate. C) the other banks are acting to prevent liquidity problems. D) the other banks are acting as fiscal agents.
Among the pioneers of real business cycle theory is ________
A) Edward Prescott B) Robert Lucas C) Robert Solow D) Paul Volcker