Under a fixed exchange rate system, a real interest rate corresponding to the upward-sloping portion of the NCF curve reflects the fact that a central bank ________, and the real interest rate corresponding to the horizontal portion of the NCF curve
reflects the fact that a central bank ________. A) can always supply more domestic currency; can always meet the demand for foreign currency
B) can always supply more domestic currency; is limited in meeting the demand for foreign currency
C) is limited in meeting the demand for domestic currency; can always meet the demand for foreign currency
D) is limited in meeting the demand for domestic currency; is limited in meeting the demand for foreign currency
B
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Suppose Frank likes to snack on sugary candy. Frank knows that it's bad for his teeth to eat sugary candy, but he doesn't care. Frank's snacking habits have no impact on anyone other than Frank. In this case, Frank's consumption of sugary candy generates:
A. a positive externality. B. a negative externality. C. neither a positive nor a negative externality. D. both a positive and a negative externality.
All of the following are economic functions of the government EXCEPT
A. providing public goods. B. providing a legal system. C. promoting competition in the market. D. determining the wage rate for most jobs.