Domestic Deflation

1.  Which of the following have substantially equivalent effects on a nation’s volume of exports and imports?​

​Exchange rate appreciation and domestic deflation

​Exchange rate depreciation and domestic inflation

​Exchange rate appreciation and a decrease in the domestic supply of money

Exchange rate depreciation and domestic deflation  

2. Which of the following statements best describes the 12 Federal Reserve Banks?​

​They are privately owned and publicly controlled central banks whose basic goal is to earn profits for their owners.

​They are privately owned and privately controlled central banks whose basic goal is to provide an ample and orderly market for U.S. Treasury securities.

​They are privately owned and publicly controlled central banks whose basic function is to minimize the risks in commercial banking in order to make it a reasonably profitable industry.

​They are privately owned and publicly controlled central banks whose basic goal is to control the money supply and interest rates in promoting the general economic welfare

3. ​Buyers will opt out of markets in which:

​there are only foreign sellers

​there is inadequate information about sellers and their products

​there are significant negative externalities

​standardized products are being produced               

4.  ​Pure monopolists may obtain economic profits in the long run because:

​of advertising

​marginal revenue is constant as sales increase 

​of rising average fixed costs

​of barriers to entry                             

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