! a) A fixed exchange rate is preferable to aflexible exchange rate becauseaggregate economic policies will be moreeffective.it is less costly to finance balance-of-payments disequilibria.periodic devaluations or revaluations will beunnecessary.None of these.b) The economy is in short-run equilibriumGroup of answer choicesat any point on the IS curve.only at the natural level of GDP.at any point on the LM curve.only at a point that is on both the IS and LMcurves.

Ans: A fixed exchange rate is referred to a system where the exchange rate is fixed by the…

Answered: a) A fixed exchange rate is preferable…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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If policymakers expand aggregate demand, they can lower unemployment but only by (a) temporarily, decreasing inflation (b) temporarily, increasing inflation (c) permanently, decreasing inflation (d) permanently, increasing inflation
Indicate whether each view follows the traditional (neoclassical) view of money, banking, and capitalist economies, or the (post)Keynesian view. The level of investment depends most significantly on the - interest rate Money developed through rational, private actors in an - attempt to economize on transaction costs Money precedes production 1. Traditional (neoclassical) Loans create the money necessary to invest, and therefore to produce and generate an income to deposit into banks. (loans create deposits) 2. (Post) Keynesian The level of investment depends most significantly on - expectations ('animal spirits') Deposits into banks create the funds that get loaned out. - (deposits create loans) Production precedes money
Suppose that on January 1 2015, the TL price of the dollar is 2.50 over the year, inflation rate in Turkey is 35 % and U.S. inflation rate is 15%. If the exchange rate is $1= 2.80 TL at end of the year, which currency appears to be overvalued?
In this "The General Theory of Employment, Interest and Money, 1936". John Maynard Keynes stated that " When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done." Do you agree with Keynes statament the market failure is inevitable in financial markets? Justify your answer with the reference to economic theory and evidence.
You are trying to invest $100,000 in a portfolio of stocks and bonds. You want the highest return possible but have a number of criteria to ensure diversification and risk management. The funds available for investment and their information are provided below. 2) Bond Rating| Year to Maturity Investment "Tech Sector" Expected Return GE Bond BBB 4 No 4.25% AMD Stock Yes 14% -- -- Moscow Bond ΑΑA 10 No 2.3% Apple Stock Pape Stock Yes 7% No 8.1% -- Tesla Inc. Stock Yes 6% -- Junk Inc. Bond D 3 No 17% Assume you want no more than 50% of total investments in stocks and no more than 15% invested in bonds with a rating below “BBB". Additionally, assume you want some liquidity such that no more than 70% of your investments can be in bonds with greater than 5-years until maturity. Further, you want at least 40% of your total investments in the Tech Sector (stocks or bonds). In Excel, create an LP that maximizes expected return subjects to the investment constraints listed above. Make sure to…
2. Based on market indicators, you are convinced that the price of wheat is going to significantly increase over the next 3 months. How could you use the futures market for this will you take a long position or a short position? Explain why.
Considering an economy with two labor markets – one for agricultural workers and one for manufacturing workers. Suppose there is a Dutch Disease which explains about a major market failure originated in the existence of cheap and abundant natural or human resources that keep overvalued the currency of a country for an undetermined period of time, thus turning non profitable the production of tradable goods using technology in the state-of-the-art. It is an obstacle to growth on the demand side, because it limits investment opportunities. Suppose initially that neither is unionized what will happen to these conditions? a) If manufacturing workers formed a union, what impact would you predict on the wages and employment in manufacturing? b) How would these changes in the manufacturing labor market affect the supply of labor in the market for agricultural workers? c) What would happen to the equilibrium wage and employment in this labor market?
Which statement is incorrect related to forward exchange rates? * They are relevant for any non-domestic business transactions. They reflect expectations about the future value of currencies They are normally determined by the forces of demand and supply in the in the FOREX Market. They are usually slightly lower than the spot rate. none of the above
help me understand rate on return
Need immediate help with Econ question! The Bank of International Settlements (BIS), a somewhat secretive organization based in Switzerland, recently touted the idea of a Central Bank Digital Currency (CBDC). The CBDC has been gaining popularity among the so-called global elite. To quote a New York Times article To keep their money relevant, many central banks are experimenting with digital versions of their currencies. These currencies are virtual, like Bitcoin; but unlike Bitcoin, which is a private enterprise, they are issued by the state and function much like traditional currencies. The idea is for central banks to introduce these digital currencies in limited circulation — to exist alongside cash as just another monetary option — and then to broaden their circulation over time, as they gain in popularity and cash fades away...A central-bank digital currency can [sic] be a useful policy tool. Typically, if the Federal Reserve wants to stimulate consumption and investment, it can…

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