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Question
If we think back to Chapter 11 when we discussed moral hazard, discuss how a government ceding the right to control the amount of currency to a central bank is a way to treat a potential moral hazard problem.Answer
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Related questions
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There was a lot of pressure on U.S. policymakers in late 1999 and into the early 2000's to decrease the value of the dollar. This pressure was coming mainly from: A. importers.B. foreign manufacturers.C. U.S. manufacturers.D. foreign central banks.
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An increase in the real interest rate on U.S. bonds, everything else equal, will have the following impact on the foreign exchange market: A. the demand for dollars will decrease.B. the supply of dollars will increase.C. the dollar will depreciate relative to foreign currencies.D. the demand for dollars will increase.
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Differences in inflation rates between two countries can explain: A. short-run changes in the exchange rate but not long-run changes.B. changes in the real exchange rate over the long run, but not changes in the nominal exchange rate.C. long-run changes in the exchange rate but not short-run changes.D. changes in the exchange rate in both the short run and the long run.
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The empirical evidence on purchasing power parity seems to point out that: A. purchasing power parity can explain long run movements in exchange rates but does not hold up to scrutiny for short-run changes.B. purchasing power parity does a good job of explaining short-run movements in exchange rates, but does not hold up to scrutiny over the long run.C. purchasing power parity is a good theory for international trade, but is of little use in explaining exchange rate movements.D. inflation and a country's rate of currency appreciation are positively correlated.
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Which of the following statements is true? A. Adverse selection is a problem of monopoly and moral hazard is a problem of information asymmetry.B. Adverse selection and moral hazard are problems stemming from asymmetric information.C. Adverse selection is a problem that occurs after a transaction.D. Moral hazard is a problem that occurs before a transaction.
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Compare/contrast the Nasdaq Composite Index with the Dow Jones Industrial Average.
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