With Which of the Following Statements Would the "No -

question 137

Multiple Choice

With which of the following statements would the "No - Markets Fail Often" camp disagree?

• A) Banks' tension between prudence and profits contributes to business cycles.
• B) Money gives people a way not to spend.
• C) Money's store-of-value function contributes to business cycles.
• D) Money helps markets adjust to equilibrium.
• E) Money can block the transmission mechanism between interest rates and aggregate demand.

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Definitions:

Financial Account

A component of a country's balance of payments that records all transactions for investment in foreign assets and liabilities.

Current Account

Part of a country's balance of payments, including the trade balance, net income from abroad, and net current transfers, reflecting the difference between a nation's savings and its investment.

Balance of Payments

This is a record of all financial transactions made between consumers, businesses, and the government in one country with others.

Managed Floating Exchange Rate

A currency value system that allows its exchange rate to fluctuate in response to the foreign-exchange market but with central bank interventions to stabilize it when deemed necessary.