Even Though It May Seem That Nations Have a Wide

question 105

Multiple Choice

Even though it may seem that nations have a wide variety of policy options to stabilize their economies, there are a number of issues to be considered and overcome. Which of the following is NOT an issue confronting policy makers?

• A) the desire to maintain fixed exchange rates or membership in a pegged currency bloc
• B) long and uncertain time lags when policy effects will occur
• C) the pass-through issue, when little effect occurs on the real effective exchange rate
• D) international controls that limit the ability of any nation to determine its exchange rate policy

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive.

Equilibrium

A state of balance in a market or economy where supply equals demand, with no external influences causing disruption.

Market

Any structure that allows buyers and sellers to exchange any type of goods, services, and information.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive in the market.