In some developing countries and in some former Communist countries, people exchange their domestic currencies for foreign currencies such as the dollar in black markets. Why would this practice go on?
What will be an ideal response?
The country must have some restrictions on currency exchange. Some countries have made it illegal to exchange the domestic currency for dollars beyond some minimum amount while others set official exchange rates. If the official exchange rate differs from the "market" exchange rate, it is likely black markets will form.
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Which one of the countries below announces inflation targets?
A) Japan B) U.S. C) Canada D) Mexico E) Nicaragua
The new classical school holds that: a. macroeconomic equilibrium is achieved only through active government intervention. b. unemployment is only temporary, because the economy tends naturally toward equilibrium. c. rigid prices and wages prevent the economy from achieving equilibrium. d. macroeconomic equilibrium cannot occur as long as the aggregate supply curve isvertical
e. rational expectations result in involuntary unemployment and prolonged periods of macroeconomic disequilibrium.