What are the main arguments presented against flexible exchange rates?
Arguments against flexible exchange rates are that international trade levels will be diminished due to the uncertainty of future currency prices and that the flexible rates would lead to inflation. Proponents of flexible exchange rates have strong counter-arguments to those views.
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If expectations are adaptive, how will the economy adjust to a new long-run equilibrium in response to contractionary monetary policy? Support your answer with a graph of the Phillips curve
What will be an ideal response?
Which of the following possibly determines the allocation of goods and services in a free market?
a. The availability of raw materials b. The cost of production c. The level of government intervention d. The ability of the producers to produce a differentiated product e. The willingness and ability of consumers to pay for the product