Under a system of free-floating exchange rates, a nation will experience
A. persistent surpluses in its balance of payments.
B. persistent deficits in its balance of payments.
C. a tendency toward equilibrium in its balance of payments.
D. persistent surpluses in its balance of trade.
Ans: C. a tendency toward equilibrium in its balance of payments.
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Decreased investment spending in the economy would be a possible result of
A) an open market sale of bonds by the Fed. B) an increase in the money supply. C) an open market purchase of bonds by the Fed. D) a decrease in interest rates.
Philip is an average contractor in town, and he earns $40,000 a year. Billy is the best contractor in town, and he earns $480,000 a year. Philip's contracting services
a. are valued more by the market relative to Billy's and that explains why his income is higher than Billy's. b. are valued less by the market relative to Billy's and that explains why his income is higher than Billy's. c. are valued less by the market relative to Billy's and that explains why his income is lower than Billy's. d. are more expensive because he receives a compensating differential.