Large economies, such as the U.S. economy, should ________ adopt a flexible exchange rate, because giving up the power to stabilize the domestic economy via monetary policy ________.
A. nearly always; comes with a high cost
B. nearly always; is of little consequence
C. almost never; is of little consequence
D. almost never; comes with a high cost
Answer: A
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John moved his office from a building he was renting downtown to the carriage house he owns in back of his house. How will his profit change?
a. Implicit costs fall. b. Explicit costs remain unchanged while implicit costs rise. c. Economic profit must fall. d. Explicit costs rise. e. Accounting profit will rise.
By referencing events in the news or something from your personal experiences, describe one example of each of the five foundations of economics discussed in this chapter.
Five Foundations of Economics: Incentives Trade-offs Opportunity cost Marginal thinking The principle that trade creates value