What are the general conditions under which a fixed exchange rate makes sense for a country?
What will be an ideal response?
A fixed exchange rate makes sense for a country that has a poor reputation for controlling inflation on its own. The country's economy should also be well integrated with the economy of the country they are fixing their exchange rate with, including significant trade with the country and a close positive correlation with its macroeconomic fluctuations. Finally, the country needs to have a high level of foreign exchange reserves.
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A firm should use marginal analysis when making a price-output decision
a. True b. False Indicate whether the statement is true or false
Your comparative advantage in a specific area is determined by
A) minimum wage laws, health and safety standards and marginal tax rates. B) the market value of the skill relative to your opportunity cost of supplying it. C) the absolute value of the skill in the performance of a specific job. D) the comparative positions of the wealthy, the middle income individuals and low income individuals.