A country with a fixed exchange rate faces:
a. no monetary policy constraints in the long run.
b. no monetary policy constraints in the short run.
c. no monetary policy constraints in the long run and the short run.
d. monetary policy constraints in the long run and the short run
Ans: d. monetary policy constraints in the long run and the short run
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Which of the following statements regarding a price-taking firm is correct?
A) Demand = average revenue > marginal revenue. B) Demand = marginal revenue > average revenue. C) Demand = price = average revenue = marginal revenue. D) Demand = price > average revenue > marginal revenue.
If the risk of buying U.S. assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then
a. net capital outflow and the real exchange rate will rise. b. net capital outflow will rise and the real exchange rate will fall. c. net capital outflow will fall and the real exchange rate will rise. d. net capital outflow and the exchange rate will fall.