Why may a "black market" develop in nations in which government has imposed capital controls?
a. All foreign currency purchases and sales are conducted and controlled by the government, and it is illegal to trade privately.
b. Traders are trying to avoid the taxes they must pay on each transaction.
c. The government makes a huge profit on currency trades that the private sector wants access to.
d. None of these explains why a "black market" may develop in these nations.
Ans: a. All foreign currency purchases and sales are conducted and controlled by the government, and it is illegal to trade privately
You might also like to view...
Auto and steel workers commonly experience this type of unemployment in a recession
A) frictional unemployment B) cyclical unemployment C) structural unemployment D) natural unemployment rate
According to the AD-AS diagram, policy makers face a short-term trade-off between ________ when implementing anti-inflation policies.
A. recession and stagflation B. inflation and unemployment C. long-term equilibrium and short-term equilibrium D. inflation and expansion