Under Bretton Woods,
A) any foreign country cannot devalue its currency against the dollar in conditions of "fundamental disequilibrium."
B) any foreign country could devalue its currency against the dollar in conditions of "fundamental disequilibrium," but the system's rules did not give the United States the option of devaluing against foreign currencies.
C) any foreign country could devalue its currency against the dollar in conditions of "fundamental disequilibrium," and the system's rules did give the United States the same option of devaluing against foreign currencies.
D) the U.S. could devalue its currency against the foreign currencies in conditions of "fundamental disequilibrium."
E) any foreign country can revalue its currency against the dollar in conditions of "fundamental disequilibrium."
B
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"My son is a smart entrepreneur. Rather than borrow money from others, he used his own savings to start his music business, and thereby avoided paying interest on loans." An economist would respond by saying
A) "both you and your son are complete idiots." B) "it's always good to avoid borrowing and paying interest." C) "nobody can avoid paying interest, not even your clever son." D) "your son might have avoided paying interest, but he also avoided earning interest."
If prices are held above the equilibrium price:
A) social surplus is maximized. B) all firms incur losses. C) there exists a surplus in the market. D) there exists a shortage in the market.