By fixing the exchange rate, the central bank gives up its ability to A) adjust taxes. B) increase government spending. C) influence the economy through fiscal policy. D) depreciate the domestic currency. E) influence the economy through monetary policy. ANSWER E
Date: September 10th, 2020
Explain the purpose of the following figure 14-2 from the text in the context of the interest rates on the dollar and the Japanese Yen between 1980 and 2010. What will be an ideal response? ANSWER Since the dollar and the Yen interest rates are not measured in comparable terms, they can move quite […]
Date: September 10th, 2020
All else equal, if Canada raises its interest rates, A) the dollar depreciates. B) the U.S. demand for Canadian dollars increases. C) the Canadian supply of Canadian dollars increases. D) Both A and B. E) Both A and C. ANSWER D
Date: September 10th, 2020
Free trade and globalization is generally believed A) to cause a degradation in the world’s environment. B) to improve the environment by correcting for distortions caused by import competing policies. C) to help spread the best of each country’s culture, so as to uplift global cultural standards. D) to help each country safeguard the best […]
Date: September 10th, 2020
If an industry is imperfectly competitive, and markets are segmented then A) a firm may find that it is profitable to engage in dumping. B) a firm may find that international trade is unprofitable. C) a firm may find that it should promote scale economies. D) a firm may find that it has lost its […]
Date: September 10th, 2020
The main difference between stabilization policies and structural reform policies is that stabilization policies A) focus on microeconomic issues and structural reform policies focus on the macroeconomic environment. B) focus on macroeconomic issues and structural reform policies focus on the microeconomic environment. C) are rarely used by reform governments; they prefer to use structural reform […]
Date: September 10th, 2020
Under some circumstances, trade could stifle the development of new industries and reduce global efficiency. All of the following describe conditions that could lead to that situation EXCEPT A) an initial head start gives a scale advantage to already existing firms in one country. B) diseconomies of scale make it impossible for new firms to […]
Date: September 10th, 2020
What are the predictions for the long run equilibrium of the Monetary Approach? What will be an ideal response? ANSWER Money supplies: Given the equations, = PUS/PE PUS = MUSS/L(R$, YUS) PE = MES/L( , YE) one can show that an increase in the U.S. money supply MUSS causes a proportional increase in the […]
Date: September 10th, 2020
What was the Plaza Agreement about? What will be an ideal response? ANSWER A coordinated intervention aimed at dollar depreciation.
Date: September 10th, 2020
Intraindustry trade can be explained in part by A) transportation costs within and between countries. B) problems of data aggregation and categorization. C) increasing returns to scale. D) All of the above. ANSWER D
Date: September 10th, 2020
