The effect of an exchange rate system on the price level between countries is that:
A) exchange rate volatility causes the prices to converge between countries.
B) a fixed exchange rate results in price convergence.
C) a fixed exchange rate results in price divergence.
D) all member nations of the ERM saw a divergence in prices.
Ans: B) a fixed exchange rate results in price convergence.
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Because of the large current account deficits accumulated by the United States since 1981, the United States has become a
A) nation with no official reserves. B) balanced nation. C) broke nation. D) creditor nation. E) debtor nation. The table above gives data on the U.S. balance of payments in 2019.
An unregulated paint factory that pollutes a river results in ______ and _____
A. overproduction; a price that exceeds the marginal benefit from the good B. underproduction; a price that equals the marginal benefit from the good C. the efficient quantity produced; a marginal benefit equal to the mar-ginal social cost D. an inefficient quantity produced; a marginal benefit below the mar-ginal social cost