The hands-off view of the classical school rests on which of the following two simple propositions about markets?
a. Demand creates its own supply and markets are basically competitive.
b. Industrial policy is inevitable and all prices are flexible.
c. Market failure occurs and prices are rigid.
d. Wages are sticky downward and market failure is inevitable.
e. Markets are basically competitive and prices are flexible.
e
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Which of the following is not an advantage to a country of choosing to fix its exchange rate against a major currency, rather than choosing a floating exchange rate?
A) Pegging reduces the uncertainty caused by currency fluctuations and thereby simplifies business planning. B) Pegging allows the country more flexibility in conducting monetary policy. C) Pegging insures that interest payments stemming from foreign loans do not fluctuate with the value of the currency. D) Pegging helps avoid inflation in imported goods caused by currency depreciation for countries with significant levels of imports.
What is productivity?
What will be an ideal response?