QUESTION 2 In the long run, an increase in the nominal exchange rate is likely to lead to Note: Multiple answers are possible. A. an increase in exports B. a decrease in exports C. an increase in imports D. a decrease in imports

QUESTION 2 In the long run, an increase in the nominal exchange rate is likely to lead to Note: Multiple answers are possible. A. an increase in exports B. a decrease in exports C. an increase in imports D. a decrease in imports

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If for some reason Americans desired to increase their purchases of foreign assets, then other things the same A. both the real exchange rate and the quantity of dollars exchanged in the market for foreign currency would rise. B. both the real exchange rate and the quantity of dollars exchanged in the market for foreign currency would fall. C. the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign currency would fall. D. the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign currency would rise.
If the prices in the United States rise faster than in Japan, a. then interest rate parity must not hold b. the exchange rate remains the same. c. the United States dollar will depreciate. d. the Japanese yen will depreciate.
a. What is purchasing power parity and how is it related to the law of one price?b. Is it reasonable to suppose that purchasing power parity holds in the long run but not in the short run?
None
If the demand for the goods that we export increases______?Group of answer choices 1The exchange rate is unaffected. 2The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates). 3The exchange rate increases (the US $ appreciates). 4The exchange rate decreases (the US $ depreciates).
a. Define the concept of equilibrium in the foreign exchange market, from an Australian perspective, using Australian dollars (AUD) and New Zealand dollars (NZD) as your currencies. Explain the factors that might bring about a fall in the exchange rate. b. What is the likely impact on Australia’s economy of a fall in the exchange rate and what can be done to prevent this from happening?
1. There are several reasons Purchasing Power Parity may not hold in reality. Among those reasons are: (Mark ALL that apply) A. The exact quality of goods varies between countries B. Some goods are not tradeable. C. Some countries have tariffs or other trade barriers. D. People's tastes vary between countries.
When the relative price of a country’s goods is high, then over time the relative price tends to_____ and the country’s currency _______. a. rise, appreciates b. rise, depreciates c. fall, appreciates d. fall, depreciates A temporary increase in transportation costs between the US and the UK that cause the relative price of US goods to jump, will cause international investors to expect a future ______of the dollar that causes US real interest to _______those in the UK. a. appreciation, exceed b. appreciation, be less than c. depreciation, exceed d. depreciation, be less than
Ap Macro:International Trade and Foreign Exchange
If foreigners want to invest more in the American economy______?Group of answer choices 1The exchange rate increases (the US $ appreciates). 2The exchange rate is unaffected. 3The exchange rate decreases (the US $ depreciates). 4The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates).
If New Zealand's inflation rate is 25% inflation vs 15% inflation in our trading partners and the $NZ depreciates by 5% then Select one: a.the real exchange rate cannot be calculated. b.the real exchange rate is unchanged. c.the real exchange rate falls. d.the real exchange rate rises.
If the real exchange rate is 2.0, the price level of domestic goods is 120, and the dollar price of foreign exchange is 0.4, what is the price level of foreign goods? Select one: a. 600 b. 50 c. 100 d. 200 e. 400