What was the main cause behind the Black Wednesday in the 1990s?
What will be an ideal response?
The Black Wednesday refers to an event during which the pound crashed in value all of a sudden. It occurred because the pound was overvalued against the German mark and this prolonged overvaluation of the pound caused the government to sharply devalue the currency when the government ran out of German mark reserves.
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Assume the United States has only one trading partner. The U.S. demand curve for foreign currency is drawn while holding constant all of the following factors except one. Which is the exception?
a. incomes of U.S. consumers b. the exchange rate c. the expected rate of inflation in the U.S. d. the foreign prices of foreign goods e. U.S. interest rates relative to foreign interest rates
Think of the economy as a pie, where public choices influence both the size of the pie and how it is divided to various interests in society. Special-interest legislation makes the pie bigger, while legislation to create traditional public goods such as roads, schools, and the justice system leads to fights over the pie, causing some of it to fall on the floor and be lost
Indicate whether the statement is true or false