In the long run, if inflation is higher in India than in the U.S., one would expect
A. the dollar to depreciate relative to the rupee
B. the rupee to depreciate relative to the dollar
C. the rupee to appreciate relative to the dollar
D. two of the above are correct
Ans: B. the rupee to depreciate relative to the dollar
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Which of the following contributes to a current account surplus for a country?
A) having tourists visit the country B) importing textiles C) having foreigners buy government securities from the country's government D) importing financial services
Adverse selection can occur when
A) all persons involved in a transaction have full information. B) one person has information not available to others. C) post-agreement incentives result in workers shirking. D) nobody has any information about a particular product.
Which of the following groups would be aided by a depreciation of the American dollar?
A. Foreign producers of goods imported by the United States. B. U.S. importers of goods from abroad. C. American producers of goods for export. D. Foreign workers.
When the coupon rate on newly issued bonds ________ relative to older, outstanding bonds, the market price of the older bond ________
A) decreases; rises in the secondary market B) decreases; falls in the secondary market C) increases; falls in the secondary market D) increases; falls in the primary market