When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?
A. The substitution effect.
B. The income effect.
C. An increase in the demand for Nike soccer balls.
D. The price effect.
Answer: A
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If a central bank does not want to see its currency ________ in value, it may pursue expansionary monetary policy to lower the domestic interest rate, thereby ________ its currency
A) fall; strengthening B) fall; weakening C) rise; strengthening D) rise; weakening
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a. a decrease in the dollar prices paid by U.S. importers. b. an increase in the cost of vacations in Florida for Japanese tourists. c. foreign holidays for U.S. residents to be less expensive. d. an increase in the foreign currency prices paid for U.S. exports. e. an increase in the demand for U.S. exports.
If a currency depreciates, a country's net exports
a. fall and AD increases. b. rise and AD increases. c. fall and AD decreases. d. rise and AD decreases.