Question

Which of the following statements is false?

Select one:

a. Very few financial crises were triggered by changes in international economics and financial conditions.

b. Many financial crises were triggered by shifts in domestic economic conditions and policies.

c. Currency mismatches led governments to peg exchange rates.

d. Developing countries are at a disadvantage because they must borrow in a major currency, such as, dollars, euros, pounds, etc.

Informal markets:

Select one:

a. arise because regulation, taxation, or some other distortion in the formal market prevents some suppliers or consumers from completing mutually-beneficial transactions.

b. enable at least some of the mutually-beneficial production and transactions restricted by regulation, taxation, or discrimination in formal markets.

c. attract some activities from the formal sector.

d. All of the above.

e. None of the above.

Among the variables that Douglass North distinguishes as significant determinants of transaction costs in markets is(are):

Select one:

a. the cost of measuring the value of goods and services to be exchanged.

b. the size of the market.

c. the cost of enforcement.

d. All of the above.

e. None of the above.

c. Currency mismatches led governments to peg exchange rates.

d. Developing countries are at a disadvantage because they must borrow in a major currency, such as, dollars, euros, pounds, etc.

Answer 1

1c. Currency mismatches led governments to peg exchange rates

Counrties facing infaltionary crisis usually peg currencies with other commodity or stronger currency.

2. d. All of the above.

All of the above reasons are correct. Informal markets often arise due to too much economic hurdles and is an easier waay out for some players.

3 d. All of the above.

Douglass North distinguishes 4 variables that dtermine the transaction cost. Options a,b and c are 3 out of the four.

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