An important factor in the choice of an exchange rate regime in low-income nations is:
A) the credentials of the finance minister.
B) the extent of liability dollarization, which can cause contractions when the home currency depreciates.
C) how dependent the nation is on imports, which must be financed by external borrowing.
D) the price level and how it affects the interest rate level in the nation.
Ans: B) the extent of liability dollarization, which can cause contractions when the home currency depreciates.
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If an economy's population grows at 3 percent and real GDP grows at 3 percent, then:
a. per capita real GDP is declining. b. the economy's standard of living is increasing. c. per capita real GDP is negative. d. per capita real GDP is constant. e. the economy is experiencing unemployment.
Which of the following statements is most consistent with the rule of rational choice?
a. "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." b. "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." c. "Police forces should be enlarged until virtually all crime is eliminated." d. "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."