Briefly explain the behavior of the Federal Reserve considering a balance of payments disequilibria within a fixed exchange rate system
What will be an ideal response?
If there were a balance of payments deficit (excess supply of dollars in the foreign exchange market), there would be downward pressure on the exchange rate. In order to prevent the exchange rate from falling, the Fed would effectively increase the demand for dollars by supplying foreign currencies. On the other hand, if there were a balance of payments surplus (excess demand for dollars in the foreign exchange market), there would be upward pressure on the exchange rate. In order to prevent the exchange rate from rising, the Fed would effectively increase the supply of dollars by demanding foreign currencies.
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The "nonconvergence" problem with the Solow growth model is that
A) a higher return to capital in poor countries should essentially cause all nations to have roughly the same standard of living, yet they clearly do not. B) if a disturbance dislodges an economy from the steady-state point, it continues moving further from that point indefinitely. C) technological change is assumed to just "drop from the sky." D) a rise in the rate of national saving does not raise the growth rate of real GDP per person.
In the market for professional basketball,
a. pro basketball teams are the suppliers and pro basketball players are the demanders b. pro basketball players are the suppliers and basketball fans are the demanders c. pro basketball players are the suppliers and pro basketball teams are the demanders d. pro basketball teams are the suppliers and basketball fans are the demanders e. basketball fans are the suppliers and pro basketball teams are the demanders