In an economy with a fixed exchange rate, when the market forces try to change the exchange rate, the government:
A. often has to deal with an unhappy domestic population who are constantly dealing with shortages or surpluses of their currency.
B. declares it can't change, and holds it constant.
C. must buy or sell its currency using its own reserve to bring equilibrium in the market to where it has "fixed" it.
D. None of these statements is true.
Answer: C
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A firm has three different investment options, each costing $10 million. Option A will generate $12 million in revenue at the end of one year. Option B will generate $15 million in revenue at the end of two years. Option C will generate $18 million in revenue at the end of three years. Which option should the firm choose?
a. Option A b. Option B c. Option C d. The answer depends on the rate of interest, which is not specified here.
As the price of washing machines fell, tens of millions of housewives substituted _______ for _______.
Fill in the blank(s) with the appropriate word(s).