The World Bank is an international agency that lends money to individual countries for projects that promote economic development.

Which of the following was NOT a cause or a characteristic of the 1994/95 Mexican peso crisis?

A) An overvalued exchange rate B) An inflow of large foreign portfolio capital C) The inability of the IMF, the world bank, and the NAFTA member countries (i.e., the United States and Canada) to predict the looming financial crisis D) Shifts by the world capital markets toward more conservative and risk-averse investments because of interest and exchange rate movements around the world E) High domestic investments with insufficient domestic savings

In Figure 17-3 above, suppose we are working under the assumption of the Lucas model. It is the year of the presidential election, and fiscal policy becomes more expansionary

If every firm is convinced that its price increase is being duplicated across the economy, we would picture this as a movement between points A) A and C. B) A and B. C) D and B. D) D and A. E) A and D.