3. How can a central bank respond to sustained merchandise trade surpluses?
A central bank can buy incoming foreign currency to add reserves and limit appreciation. It may sterilize those purchases to control domestic liquidity or let the currency float and appreciate. Authorities can also use macroprudential measures, intervene in forex markets, or adjust interest rates to manage inflation and external competitiveness.
Category: Economics
-
(Answered) What effect does a surplus on a country’s merchandise trade balance have on its currency…
-
(Answered) In which model(s) is it possible to discuss the effects of trade on income inequality within…
In which model(s) is it possible to discuss the effects of trade on income inequality within countries?
Question 17 options:
The Ricardian Model
The Hecksher-Ohlin Model
Both models
Neither model -
(Answered) Wage rates, interest rates, employment, and inflation are factors typically associated with which…
Wage rates, interest rates, employment, and inflation are factors typically associated with which general environment factor?
economictechnologicalpolitical/legalnone of the abovesocio-cultural -
(Answered) In the circular flow model, households work and receive payment from firms in the…
In the circular flow model, households work and receive payment from firms in the ___________. Question 22 options:
financial investment market
financial capital market
labor markets
savings market -
(Answered) In which way can export-led economies make themselves more resilient and less dependent on the…
In which way can export-led economies make themselves more resilient and less dependent on the weakness of their currencies for boosting their exports? Substantiate your answer with examples.
-
(Answered) Question 3: Consider utility function: U(A,B)=10AB2.The price of good A is pA=5, and the price of…
Question 3: Consider utility function: U(A,B)=10AB2.The price of good A is pA=5, and the price of good B is pB=10. Income is I=150. What arethe optimal amounts of A and B (numeric answer)?
-
(Answered) Multiple Select QuestionSelect all that applyA decreasing-cost industry is one in which firms…
Multiple Select QuestionSelect all that applyA decreasing-cost industry is one in which firms experience_ costs as their industrylower; expandshigher; expandshigher; contractslower; contracts
-
(Answered) Pimary factors of profuction reler to phoucal nesouras drectly eutracted from nature, while…
Pimary factors of profuction reler to phoucal nesouras drectly eutracted from nature, while secondary factors of groduction involve the transformation of these resources into goods
-
(Answered) The government collects money fromand spends itfirms; in factor marketshouseholds and firms; in…
The government collects money fromand spends itfirms; in factor marketshouseholds and firms; in product and factor marketshouseholds; in factor marketshouseholds; in product and factor markets
-
(Answered) The ability of a nation to produce a good more efficiently than any other nation is called a(n)A….
➤ Can a country have an absolute advantage in multiple goods?
Yes. A country can be absolutely more efficient across many or all goods if it uses superior technology, capital, or skilled labor. That does not prevent beneficial trade. Nations should still specialize where their opportunity cost is lowest, because comparative advantage determines most gains from trade and the most efficient pattern of exchange.