PRINCIPLES OF ECONOMICS
14th Edition
ISBN: 2810015433483
Author: OpenStax
Publisher: OpenStax
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Textbook Question
Chapter 29, Problem 24CTQ
Can you think of any major disadvantages to dollarization? How would a central bank work in a country that has dollarized?
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Can you think of any major disadvantages to dollarization? How would a central bank work in a country that has dollarized?
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Chapter 29 Solutions
PRINCIPLES OF ECONOMICS
Ch. 29 - How will a stronger euro affect the following...Ch. 29 - Suppose that political unrest in Egypt leads...Ch. 29 - Suppose U.S. interest rates decline compared to...Ch. 29 - Suppose Argentina gets inflation under control and...Ch. 29 - This chapter has explained that one of the most...Ch. 29 - A booming economy can attract financial capital...Ch. 29 - How would a contractionary monetary policy affect...Ch. 29 - A central bank can allow its currency to fall...Ch. 29 - Is a country for which imports and exports...Ch. 29 - What is the foreign exchange market?
Ch. 29 - Describe some buyers and some sellers in the...Ch. 29 - What is the difference between foreign direct...Ch. 29 - What does it mean to hedge a financial...Ch. 29 - What does it mean to say that a currency...Ch. 29 - Does an expectation of a stronger exchange rate in...Ch. 29 - Does a higher rate of return in a nations economy,...Ch. 29 - Does a higher inflation rate in an economy, other...Ch. 29 - What is the purchasing power parity exchange rate?Ch. 29 - What are some of the reasons a central bank is...Ch. 29 - How can an unexpected fall in exchange rates...Ch. 29 - What is the difference between a floating exchange...Ch. 29 - List some advantages and disadvantages of the...Ch. 29 - Why would a nation dollarize—that is, adopt...Ch. 29 - Can you think of any major disadvantages to...Ch. 29 - If a countrys currency is expected to appreciate...Ch. 29 - Do you think that a country experiencing...Ch. 29 - Suppose a country has an overall balance of trade...Ch. 29 - We learned that changes in exchange rates and the...Ch. 29 - If a developing country needs foreign capital...Ch. 29 - Many developing countries, like Mexico, have...Ch. 29 - What would make a country decide to change from a...Ch. 29 - A British pound cost 2.00 in U.S. dollars in 2008,...
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Similar questions
- A central bank can allow its currency to fall indefinitely, but it cannot allow its currency to rise indefinitely. Why not?arrow_forwardWhat is the difference between a floating exchange rate, a soft peg, a hard peg, and dollarization?arrow_forwardWe learned that changes in exchange rates and the corresponding changes in the balance of trade amplify monetary policy. From the perspective of a nations central bank, is this a good thing or a bad thing?arrow_forward
- Can the central bank influence the currency-deposit ratio? Explain.arrow_forwardThe reason the country of Ecuador has adopted the use of the US dollar for transactions within the country is a. to be able to lower taxes b. to increase government revenues c. to credibly commit to minimize inflationary pressures in the country d. to be able to effectively implement monetary policyarrow_forwardDoes the process of deepening globalization have a positive or negative effect on the velocity of US money?arrow_forward
- What are the key advantages of exchange-rate targetingas a monetary policy strategy?arrow_forwardUsing the Mundell-Fleming model, explain whether you think a country should pursue an expansionary monetary policyarrow_forwardWhat are the UK central bank's functions? How is the exchange rate of the country managed? Do you feel this choice of exchange rate management is beneficial to the country's GDP?arrow_forward
- Would each of the following groups be happy or unhappy if the U.S. dollar depreciated? Explain. (a) French pension funds holding U.S. government bonds. (b) U.S. manufacturing industries.arrow_forwardExplain how the contractionary monetary policy in the U.S. adds to the global recession.arrow_forwardOver the past 20 years, Brazil has experienced relatively high inflation while Japan has experienced relatively low inflation. What do you think has happened to the number of Brazilian reais a person can buy with a Japanese yen?arrow_forward
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