Explain what the free market will do if exchange rates end up in the "right ranges."
What will be an ideal response?
If exchange rates end up in the right ranges, the free market will drive each country to shift resources into those sectors in which it enjoys a comparative advantage. Only those products in which a country has a comparative advantage will be competitive in world markets.
Economics
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Money market instruments are ________ term and ________ relative to capital market instruments
A) long; risky B) short; risky C) short; less risky D) long; less risky
Economics
When a government reduces its deficits by increasing taxes, in the medium run,
A) output returns to potential. B) output increases. C) interest rate is higher. D) IS curve shifts inward to the left.
Economics