The McDonald's restaurants in Russia grow their own potatoes to guarantee that they are grown correctly. Growing potatoes is very different from running a fast-food restaurant. One could say of McDonald's decision to grow its own potatoes for the Russian franchise that
a. the bounded rationality criterion outweighs the need for quality control
b. the bounded rationality criterion is outweighed by the need for quality control
c. both bounded rationality and the need for quality control are factors that make it rational for McDonald's to grow its own potatoes
d. growing potatoes is irrational
e. there must not be many potato suppliers in Russia
Question 2
Under fixed exchange rates, a central bank
a. adjusts the money supply automatically and immediately to changes in the demand and supply of foreign exchange
b. need hold no reserves of foreign exchange
c. enforces the fixed exchange rate by refusing to buy or sell foreign exchange whenever changes occur in demand or supply
d. may find its reserves fluctuating as demand and supply conditions change
e. has no authority to buy or sell foreign exchange
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