If the dollar appreciates against the Mexican peso, consumers in Mexico are likely to buy more local products, and consumers in the United States are likely to buy more Mexican products. This phenomenon is known as:
a. forward exchange rates.
b. currency pass through.
c. expenditure switching.
d. depreciation of the dollar.
Answer: c. expenditure switching.
You might also like to view...
The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
A) 5% higher in year 1 than in year 2. B) 105% higher in year 1 than in year 2. C) 105% higher in year 2 than in year 1. D) 5% higher in year 2 than in year 1.
A hedge is
A) a financial strategy that reduces the change of suffering losses arising from foreign exchange risk. B) an exchange rate arrangement in which a country pegs the value of its currency to the exchange value. C) the possibility that changes in the value of a nation's currency will result in variations in the market value of assets. D) active management of a floating exchange rate on the part of a country's government.
In a supply-and-demand model of a labor market, which of the following should move toward an equilibrium wage and quantity?
a. cyclical unemployment b. the labor market c. the macro economy d. sticky downward wages
From 1990 to 2013, mortality under age 5 has ________ and the literacy rate has ________ .
A. decreased; decreased B. decreased; increased C. increased; increased D. increased; decreased