What benefits did an overvalued currency offer a domestic economy in the ISI period? Which sectors were typically harmed by overvalued currencies?
What will be an ideal response?
Overvalued exchange rates made it easier for targeted industries to buy imported capital goods and kept urban workers more allied with political leaders because foreign goods were relatively less expensive. It made it difficult to export, especially for the traditional commodity producers, which hurt investment and income in rural areas. Non-targeted industries lost sales and production. Industrial investment was too capital intensive and unable to create jobs fast enough to absorb labor leaving rural areas.
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In the history of banking, warehouse receipts refer to receipts
A) that goldsmiths once issued acknowledging that they held a customer's gold. B) for storing furniture in a warehouse. C) goldsmiths issued to each other when they borrowed gold. D) for storing food and other perishables in a warehouse.
What are two criticisms of the marginal productivity theory of income distribution?
What will be an ideal response?