The final market price of imports may not reflect 100% of changes in the real effective exchange rate because:
a. exchange rates in many nations are fixed.
b. there are restrictions on capital inflows.
c. domestic price distortions, such as markups or taxes, reduce the impact of the exchange rate change.
d. the government has instituted price controls.
Answer: c. domestic price distortions, such as markups or taxes, reduce the impact of the exchange rate change.
You might also like to view...
The government redistributes income to the poor, primarily through
A. regressive taxes and disability payments. B. transfer payments and progressive taxes. C. government purchases. D. higher wages.
Milton Friedman's k-percent rule says to set the rate of growth of the quantity of money equal to
A) the real interest rate. B) a constant rate. C) the rate of growth of potential GDP. D) the unemployment rate. E) last year's growth rate of real GDP.
If countries have similar factor endowments and productivities, their trade is likely to be interindustry
Indicate whether the statement is true or false
Refer to the graph below representing the market demand curve for a monopolist’s output. Which of the following quantities shown on the graph should the monopolist produce if it wishes to maximize its total revenue?
a. 900
b. 1,000
c. 1,100
d. Any of the above because total revenue does not change with a change in production.