Limiting net external wealth effects could be accomplished by limiting movements in the exchange rate. What measure might address this situation?
A) devaluing the currency
B) keeping nominal interest rates exactly 1% higher than one's trading partners
C) borrowing only in U.S. dollars
D) pegging the exchange rate to the currency of the largest creditor nation
Ans: D) pegging the exchange rate to the currency of the largest creditor nation
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In the simple circular flow
A) producers trade goods and services for monetary payments in the product market. B) consumers trade resources for goods and services in the factor market. C) businesses trade goods and services for resources in the product market. D) consumers trade goods and services for monetary payments in the factor market.
If a decrease in the price of good A causes a decrease in demand for good B, the two goods are
A) substitutes. B) complements. C) normal. D) inferior.