Present the case for floating exchange rates
What will be an ideal response?
(1 ) Monetary policy autonomy — Governments would be able to use monetary policy to reach internal and external balance. No country would be forced to import inflation and deflation from abroad.
(2 ) Symmetry — The United States would no longer be able to set world monetary conditions all by itself. The United States would have the same opportunity as other countries to influence its exchange rate against foreign currencies.
(3 ) Exchange rates as automatic stabilizers — The long and agonizing periods of speculation preceding exchange rate realignments would not occur under floating.
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In the circular flow model, firms purchase in the
a. money market and sell in the product market b. product market and sell in the resource market c. resource market and sell in the money market d. product market and sell in the product market e. resource market and sell in the product market
Which oligopoly model results in firms successively undercutting their rivals' prices until the competitive outcome is reached?
a. The contestable market model. b. The Cournot model of oligopoly. c. The Bertrand model of oligopoly. d. The monopolistic competition model.