All of the following are true regarding flexible exchange rates except
A. Speculators typically push exchange rates away from the long-term equilibrium.
B. Exchange rate movements alter relative prices and may disrupt import and export flows.
C. The quantity of foreign exchange demanded equals the quantity supplied.
D. Some people are hurt while others are helped by exchange rate movements.
Answer: A
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The Federal Reserve System was created in 1913, through the Federal Reserve Act, by the:
a. U.S. President. b. Judiciary. c. Congress. d. International Monetary Fund. e. State governments.
Consider the competitive market for oil. Which of the following would result from the discovery of new oil fields that can be profitably accessed at the current price?
a. both b and d b. an increase in the demand for oil c. an excess demand for oil as oil companies shift resources to developing the new fields d. an excess supply of oil if the price of oil fails to drop sufficiently e. an increase in the expected future price of oil