Explain how changes in relative income affect the value of a nation’s currency.
What will be an ideal response?
If a foreign nation’s income rises more rapidly than other nations’ incomes, then its expenditures on imports are likely to grow along with expenditures on everything else. This will probably cause the currency to depreciate as other nations are not growing as rapidly, and therefore, their demand for the nation’s currency is not keeping pace with the change in supply. The reverse would be true if the nation’s income grew more slowly than other nations’ incomes.
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In a Bertrand model with identical firms and a non-differentiated product, price will increase in response to
A) an increase in the number of firms. B) a decrease in the number of firms. C) an increase in marginal cost. D) a decrease in marginal cost.
The gold standard ended in the 1970s because the gold supplies failed to keep pace with the increase in money supplies required for industrialization and rapid economic growth witnessed in this era
a. True b. False Indicate whether the statement is true or false
Shocks to the economy:
A. are unexpected changes in aggregate demand or aggregate supply. B. only occur on the demand side. C. only occur on the supply side. D. refer to any economic events that change the level of output.
Figure 5.4In Figure 5.4, supply elasticity is infinite in graph:
A. A. B. B. C. C. D. D.