23. All of the following, except one, are reasons why some economists favour fix
ID: 2441293 • Letter: 2
Question
23. All of the following, except one, are reasons why some economists favour fixing the Canadian exchange rate to the U.S. dollar. Which is the exception? A) Monetary independence in Canada is overrated in that Canada almost always follows U.S. policy anyway B) Investment in Canada would be stabilized and encouraged. C) The U.S. economy is more stable than the Canadian economy. D) The brain-drain of Canadian talent to the U.S. would be reduced. 24. "A fixed exchange rate implies a fixed which results in monetary policy being A) B) " (Fill in the blanks) Price level; very effective. Price level; ineffective. C) D) Interest rate; very effective. Interest rate; ineffective. 25. All of the following statements about deflation, except one, are true. Which is the exception? A) It is characterized by interest rates at zero or near zero. B) Apart from one year, it has not occurred in Canada since the Great Depression. C) It means that a return on idle money is possible. D) It encourages consumers to postpone major purchases. E) It encourages large-scale investment in the economy. 26. Keynes did not agree with neoclassical theory about prices and wages being flexible, nor did he believe that their adjustment would guarantee full employment. Why is this? A) Because monopolistic forces in the economy cause wages and prices to be B) Because it is adjustments in the interest rate that will guarantee full employment. C) Because in modern capitalism there is too much competition to permit price-wage D) Because wage receivers and price setters belong to different groups who have inflexible and lower wages will result in decreased spending. flexibility different objectives.Explanation / Answer
23.
Some economists favor fixing the Canadian exchange rate to the US dollar due to the following reasons; as monetary independence is overrated in Canada and it follows US policy anyways. Investment stabilizes for a country with a fixed exchange rate. But the brain drain of Canadian talent to the US would reduce is not an appropriate reason to fix the exchange rate.
the correct option is (D)
24.
A fixed exchange rate implies a fixed price of domestic currency in terms of foreign currency which results in the ineffectiveness of monetary policy.
the correct option is (B)
25.
Deflation represents negative inflation characterises by interest rate zero or near zero. It encourages consumers to postpone major purchases as a value of money values and purchasing power is affected. It does not encourage large-scale investment.
the correct option is (D)
26.
Keynes did not agree with the classical view of wage-price flexibility because wage receiver and price setters belong to different groups with different objectives.
the correct option is (D)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.