Suppose the United States is experiencing a balance of payments deficit. To prevent the exchange rate from depreciating, the U.S. Treasury must
A) buy both dollars and foreign currency. B) sell both dollars and foreign currency.
C) sell dollars and buy foreign currency. D) sell foreign currency and buy dollars.
D
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When a nation chooses to fix or float, it should consider:
A) only its domestic banks, importers, and exporters. B) only whether it has a great deal of economic integration. C) only whether it has similar circumstances in terms of demand or supply shocks with its trading partners. D) both the level of economic integration and the similarity of demand or supply shocks.
The growth of GDP may understate changes in the economy's economic well-being over time if the:
A. distribution of income becomes increasingly unequal. B. quality of products and services improves. C. environment deteriorates because of pollution. D. amount of leisure decreases.