Research indicates that the optimal plan for exporter firms to follow when the currency of a country depreciates is to
A) only increase the price of the good or service being exported in the foreign country relatively to the percentage of the depreciation.
B) only increase the price of the good or service being exported in the foreign country by the full percentage of the depreciation.
C) maintain a given foreign currency price in order to maintain its market share while losing some profit.
D) increase a given foreign currency price in order to maintain its profit while losing sales to foreign rivals.
Answer: A
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In the fourth quarter of 1982, economic statistics showed the following:
Real GDP$5,189.8 billion Unemployment rate10.7% Inflation rate4.4%The conceptual variables corresponding to these data are: Potential output$5,640.3 billion Natural rate of unemployment6.1% Ideal inflation rate1.0%? a.Calculate the output gap in percentage points. Show your work. b.Calculate the unemployment gap in percentage points. Show your work. c.Calculate the inflation gap in percentage points. Show your work. d.Calculate the output loss and the inflation loss. Show your work. e.Calculate the total loss in the fourth quarter of 1982 if the weight on the inflation loss equals 2. Show your work. f.Calculate the total loss in the fourth quarter of 1982 if the weight on the inflation loss equals 6. Show your work. What will be an ideal response?
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