Posted: August 30th, 2016

If a government does nothing to stem its currency value decline in international markets?

Inflation can reduce debt because
a it reduces the value of the currency, so debt is paid back with cheaper money
b it reduces the value of the currency and actually reduces debt
c both of the above
d none of the above
13 The cost of printing is always lower than the cost of money. That being the case, why doesn t the Fed just print lots of money
a To have value, the supply of money has to be limited
b The Fed does that all the time anyway
c The decision to print money can only come from the Congress
d None of the above
14 Banks prefer to have many depositors rather than one big one. Why?
a Large number of depositors bring stability to the bank
b The bank will be in trouble if a single large depositor decides to close her account.
c Banks are unwilling to make money on the float.
d a and b
15 A country with comparative advantage in production of wine should
a export its wine
b impose a tariff on wine from other countries
c not specialize in producing wine
d impose a quota on imported wine
16 A strong currency
a is harmful to the economy
b facilitates exports
c facilitates imports
d is trade neutral
17 If a government does nothing to stem its currency value decline in international
a it is probably aiming at reducing unemployment at home
b it is probably because of an incompetent government that does not understand economics
c it is probably because the government wants to encourage imports
d none of the above

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