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.

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter11: Foreign Exchange, Trade, And Bubbles
Section: Chapter Questions
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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

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