In a "crawling peg" regime, ________
A) the value of the currency is fixed to a basket of commodities
B) higher inflation is permitted
C) several anchor currencies are used in succession
D) the currency may gain value, but cannot lose value
B
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There is much debate about whether the U.S. government should eliminate the penny from circulation and instead round all prices to the nearest 5 cents for everyday cash transactions. Which function of money does a penny not serve well?
a) Medium of exchange b) Unit of account c) Store of value d) The penny does not serve any of the functions of money well.
If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade began between these two countries
A) the relative price of the land-intensive product would increase in Australia. B) the relative price of the capital-intensive product would increase in Australia. C) the relative price of the land-intensive product would increase in Belgium. D) the relative price of the capital-intensive product would decrease in Belgium. E) relative product prices would diverge between Australia and Belgium.