Under a system of flexible exchange rates, which of the following will cause the nation's currency to depreciate in the exchange market?
a. an increase in foreign incomes
b. a domestic inflation rate of 10 percent while the nation's trading partners are experiencing stable prices
c. an increase in domestic interest rates
d. a reduction in interest rates abroad
B
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The income elasticity of demand for foreign travel
A) is likely to be smaller than the income elasticity of demand for food. B) is likely to be larger than the income elasticity of demand for food. C) cannot be compared to the income elasticity of demand for food. D) is likely to be inelastic. E) is likely to be negative.
If net exports increases, but neither government expenditure nor net taxes change, saving must increase
Indicate whether the statement is true or false
Which of the following is not an advantage of cost-plus pricing?
A) If a firm is selling multiple products, it ensures that the firm's prices will cover costs that are difficult to assign to one product. B) It ensures that the firm will maximize its profits. C) It is easy to calculate. D) It requires little information.
Which statement about the discount rate is true?
a. A small change in the discount rate has a huge impact on the available money in the economy. b. The Fed often changes the discount rate several times in a single year. c. The discount rate impacts the amount of reserves that a bank must have on hand. d. It is a very important tool because banks rely heavily on being able to borrow from the Fed.