What are the risks to a country of fixing its exchange rate to that of another country?
What will be an ideal response?
When a country fixes the value of its currency to that of another country it basically imports the monetary policy of the other country, which in many cases can be good. There are risks, however in the sense that the central bank of the country that the currency is fixed to is really not concerned with what is best for the outside country and is going to formulate policy that is in the best interest of its own country. Instead of having a stabilizing effect on the country it could do just the opposite.
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Which of the following are necessary conditions for successful price discrimination?
a. zero transactions costs b. a perfectly competitive market structure c. an imperfectly competitive market structure d. at least two different markets with different price elasticities of demand e. at least two different markets with different price elasticities of supply A) a, b, and d only B) c and d only C) a, c, d, and e only D) a and c only
What is the lowest price the firm would accept in the long run?
