Capital control is described by all of the following EXCEPT:
a. restricting merchandise trade.
b. restricting the trade in foreign exchange.
c. channeling the currency trade through the government.
d. restricting cross-border financial transactions.
Ans: a. restricting merchandise trade.
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From 1929 to 1935, countries that:
A) abandoned the gold standard had higher rates of growth of GDP than countries that continued on the gold standard. B) continued on the gold standard had higher rates of growth of GDP than countries that abandoned the gold standard. C) maintained capital controls had lower rates of growth of GDP than countries that continued on the gold standard. D) removed capital controls had lower rates of growth of GDP than countries that abandoned the gold standard.
Bart consumes food and clothing, which are both normal goods. Suppose that the price of food falls. The substitution effect of this price decrease is ________ and the income effect of this price decrease is ________
A) that Bart buys more clothing and less food; that Bart buys more of both food and clothing B) reflected by a change in the relative prices of food and clothing; is represented by a movement along the original indifference curve C) reflected by a parallel shift outward of the budget line; that Bart earns more money each month D) reflected by the change in the slope of the budget line; that Bart has greater purchasing power