If nominal exchange rates do not change, an increase in the U.S. price level relative to the foreign price level represents a real appreciation of the dollar. However, if nominal exchange rates can change, is an increase in U.S. inflation relative to foreign inflation likely to cause appreciation of the dollar in the short run?
What will be an ideal response?
No. An increase in U.S. inflation relative to foreign inflation is likely to reduce the demand for dollars relative to other currencies. This will cause the nominal exchange rate to increase, a depreciation of the dollar relative to other currencies, and thus the effect on the real exchange rate is unclear.
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A) inelastic B) unit elastic C) perfectly inelastic D) elastic
The gap between Federal expenditures and Federal revenues after 1980 was caused primarily by
A) the recessions which occurred in the 1980s. B) a substantial decrease in Federal revenues. C) a substantial increase in Federal expenditures. D) rising interest rates which made caused investment and growth to collapse.
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a. the level of output where MC = AVC b. the equality between MR and MC c. the production of those goods and services most valued by consumers d. the point where marginal revenue equals average total cost e. the production of a good up to the point where AFC = 0
Which retail operation would have the highest costs per book sold?
A. A small independent bookstore B. A large retail bookstore chain C. An Internet seller of books D. The Internet seller and retailer