Suppose that labor is mobile between countries A and B. If the relative demand for goods rises in country A, then labor can flow from ______________. It may be possible in this situation for countries A and B to __________________ which would help to___________________
A) country A to country B; fix the exchange rate between the two countries (or have a common currency); eliminate the risks associated with having a flexible exchange rate.
B) country B to country A; impose trade restrictions upon one another; increase employment in country A
C) country B to country A; fix the exchange rate between the two countries (or have a common currency); eliminate the risks associated with having a flexible exchange rate
D) country A to country B; adopt flexible exchange rates; reduce the risk of exchange rate fluctuations
C
You might also like to view...
To be accepted as money, an item must perform all of the following functions EXCEPT
A) be a medium of exchange. B) serve as a store of value. C) be easily reproduced. D) serve as a standard of deferred payment.
When there is a recession (a fall in output) and prices are increasing, and this situation is caused by adverse supply shocks, the term economists use to describe it is
A) stagflation. B) inflation. C) aggregate shifts. D) stagnation.