Author Question: When most shocks originate in the monetary sector, it is generally better to have A) a flexible ... (Read 78 times)

acc299 · **on:** Jun 30, 2018

When most shocks originate in the monetary sector, it is generally better to have

A) a flexible rate system.
B) a fixed rate system.
C) a gold standard.
D) a managed float.

Question 2

Why did Adam Smith criticize the trade barriers imposed by the mercantilists?

What will be an ideal response?

nyrave · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

B

Answer to Question 2

Smith was highly critical of trade barriers because they decrease specialization, technological progress, and wealth creation. He also recognized that imports enable a country to obtain goods that it cannot make or cannot make as cheaply, while exports are made for someone else and are useful only if they lead to imports.