In the case of a currency union, what is a nominal anchor?
A) It is the weight of the efficiency loss from changing to a common currency.
B) It is an independent value, such as the value of the common currency unit, constraining the ability of a nation to inflate its currency and prices.
C) It is a nominal measure of GDP that is not the same as the measure for real GDP.
D) It links that nation to other members of the currency union and permits no trade or financial relationships outside the union.
Ans: A) It is the weight of the efficiency loss from changing to a common currency.
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If Marie buys a sailboat, which increases the productivity of her leisure time, she
a. increases her productivity of nonmarket work b. increases her productivity of market work c. will spend less time in nonmarket work d. will spend less time in leisure activities e. will spend more time in market work to pay for the boat's maintenance
When economists say that people choose rationally, this means
a. they gather all relevant information before making their purchases b. once a pattern of behavior has been established, people tend to become set in their ways c. people respond in predictable ways to changes in costs and benefits d. people rarely make errors when they are permitted to make transactions e. once made, decisions are never reversed