What is the drawback for a country that chooses to fix its exchange rate?
a. Fixing the exchange rate can deteriorate the international competitiveness because the real exchange rate can't fluctuate anymore.
b. Businesses in the country are more exposed to business risks associated with exchange rate changes.
c. The central bank loses its ability to influence the money supply, unless severe capital controls are imposed.
d. Fixing the exchange rate has no disadvantages and should be adopted by all countries.
.C
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An unstable inflation rate
a. always redistributes real income from lenders to borrowers. b. always redistributes real income from borrowers to lenders. c. adds to the risk of borrowing and lending and interferes with long-run financial planning. d. makes goods and services too expensive. e. always redistributes real income from taxpayers to the government.
An increase in investment and government spending can be expected to shift the:
A. Aggregate expenditures curve downward and the aggregate demand curve leftward B. Aggregate expenditures curve upward and the aggregate demand curve leftward C. Aggregate expenditures curve downward and the aggregate demand curve rightward D. Aggregate expenditures curve upward and the aggregate demand curve rightward