Which of the following statements about exchange rate is most likely correct?
a. Exchange rates will affect imports and exports but not aggregate demand in the economy.
b. Exchange rates will affect imports and exports and thus affect aggregate demand in the economy.
c. Exchange rates will affect imports and exports and thus affect aggregate supply in the economy.
d. Exchange rates do not affect imports and exports or aggregate demand in the economy.
b. Exchange rates will affect imports and exports and thus affect aggregate demand in the economy.
You might also like to view...
Refer to Figure 7.1. Suppose that instead of $350, Angus earns only $250 by playing the bagpipes, but all other earnings remain the same. Who values the property rights to the air more?
A) Angus B) Dudley C) They value the property rights equally. D) Neither value the property rights.
If a central bank does not want to see its currency ________ in value, it may pursue contractionary monetary policy to raise the domestic interest rate, thereby ________ its currency
A) fall; strengthening B) fall; weakening C) rise; strengthening D) rise; weakening
A difficulty faced by policymakers who wish to use the unemployment rate as a guide to whether the economy is weak or strong is that
A) the natural rate of unemployment is hard to measure. B) the natural rate of unemployment almost never changes. C) policymakers must use data on output to tell whether the unemployment rate is too high or too low. D) the impact of policy on the economy is subject to long and variable lags.
Perfectly competitive markets are characterized by: a. rivalry in product design
b. competition in terms of product quality. c. attempts by sellers to outdo one another with good service. d. none of the above.