The exchange rate:
a. states the price of one currency in terms of another currency
b. is the rate at which one country's money is flowing to a second country.
c. is closely related to the concept of comparative advantage.
d. is closely related to the concept of absolute advantage.
a
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What did economists Robert Jensen and Nolan Miller determine must be true for a good to be a Giffen good, where the income effect is larger than its substitution effect?
What will be an ideal response?
People should buy bonds when they think that interest rates are as high as they will go
Indicate whether the statement is true or false
Because increases in input prices eventually make it to consumers when they buy the final product, the PPI:
A. is considered a good predictor of future consumer prices. B. accounts for inflation before it reaches consumers, adjusting the CPI downward. C. is a lag variable for inflation. D. accounts for inflation before it reaches consumers, adjusting the CPI upward.
When the price of a good changes, the substitution effect can be found by comparing the equilibrium quantities purchased
A) on the old budget line and the new budget line. B) on the original indifference curve when faced with the original prices and when faced with the new prices. C) on the new budget line and a hypothetical budget line that is a shift back to the original indifference curve parallel to the new budget line. D) on the new indifference curve.