An international trade shock arising from a sudden increase in import demand is likely to be least disruptive to a country with
A. a floating exchange-rate system.
B. a fixed exchange-rate system with sterilization.
C. a surplus in the overall payment balance.
D. a fixed exchange-rate system without sterilization.
Answer: A
Economics
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A limitation of the discount rate as a policy tool is that the initiative for its use rests with
A) commercial banks. B) consumers. C) the U.S. Treasury. D) state governments.
Economics
If the MPC = 3/4, an increase in government purchases of $40 billion will ultimately lead to:
a. a $160 billion increase in aggregate demand. b. a $40 billion increase in aggregate demand. c. a $30 billion increase in aggregate demand. d. a $30 billion decrease in aggregate demand.
Economics