The problem with using foreign exchange rates to convert one country's GDP into dollars is that
A. exchange rates do not reflect differences in inflation rates.
B. not all goods and services are sold on world markets.
C. the dollar has been losing value over the last twenty years.
D. the values of currencies are not comparable.
Answer: B
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The process in which people seeking higher yielding securities take their funds out of the banking system thus restricting the amount of funds banks can lend is called
A) capital mobility. B) loophole mining. C) disintermediation. D) deposit jumping.
The case for a "hands off" economic policy is based on the widely held belief that
A. Fiscal policy works but monetary policy does not. B. Discretionary policy can improve the economy in theory but is often impractical in practice. C. Monetary policy works but fiscal policy does not. D. Economic theory is inadequate to formulate effective discretionary policy.