The conversion of a barter economy to one that uses money
A) increases efficiency by reducing the need to exchange goods and services.
B) increases efficiency by reducing the need to specialize.
C) increases efficiency by reducing transactions costs.
D) does not increase economic efficiency.
C
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What impact might a decrease in the U.S. federal budget deficit have on interest rates and exchange rates in the market for the U.S. dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.)
A) Interest rates and exchange rates decrease. B) Interest rates and exchange rates increase. C) Interest rates increase and exchange rates decrease. D) Interest rates decrease and exchange rates increase.
A narrow target zone exchange rate band (such as the EEC had until 1992 ) is most similar to
A) a flexible exchange rate system. B) a single currency. C) a fixed exchange rate system. D) a managed floating exchange rate.