Assume that policy makers are pursuing a fixed exchange rate regime and that the economy is initially operating at the natural level of output. Which of the following will occur as a result of a revaluation?

A) The real exchange rate will be permanently higher in the medium run.
B) The real exchange rate will be permanently lower in the medium run.
C) The effects of this revaluation on the real exchange rate will be ambiguous in the medium run.
D) The real exchange rate will be unchanged in medium run.
E) The nominal exchange will initially fall in the short run and then increase in the medium run.


D

Economics

You might also like to view...

Suppose a tornado ravages a city, causing 5 million dollars in expenditures on new construction and healthcare for the victims. Those new expenditures

A) would be added to the gross domestic product account. B) would be subtracted from the gross domestic product account. C) would be added to the gross domestic product account and subtracted from the national income account. D) would impact GDP in none of the above ways.

Economics

Assume that maximum feasible hourly productions levels if all resources are utilized in the United States are either 8 yards of fabric or 4 bushels of wheat

Maximum feasible production levels if all resources are utilized in Japan are either 3 yards of fabric or 6 bushels of wheat. Based on this information A) beneficial trade is absolutely impossible between the two countries. B) the United States will benefit from trading but Japan will not. C) both nations will gain from specialization and trade, with the United States exporting wheat and Japan exporting fabric. D) both nations will gain from specialization and trade, with the United States exporting fabric and Japan exporting wheat.

Economics

If it is employing the rule of reason when considering an antitrust case, the court

a. considers why the offending practice was adopted and its effect on competition b. does not consider why the offending practice was adopted or its effect on competition c. ignores the economic rationale for the offending practice and its consequences d. needs only determine that the offending practice took place e. considers only whether the firm has market power, not whether it used that power unreasonably

Economics

Those living in the poorest quartile of countries would like to emigrate because:

A. earnings are higher for the same skill level in richer countries. B. the opportunities to gain more education are higher in richer countries. C. the cost of living is lower in richer countries. D. All of these statements are true.

Economics