Suppose country A pegs its nominal exchange rate to country B and that country A has a higher inflation rate than country B. In this situation, country A will experience
A) a real appreciation.
B) a worsening trade position.
C) an increase in the real exchange rate.
D) all of the above
E) none of the above
D
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Explain why the simple deposit multiplier overstates the true deposit multiplier
What will be an ideal response?
The largest portion of any nation's current account is typically
A) imports and exports. B) gold sales. C) the sale of U.S. assets. D) SDRs.
The demand for foreign currency is derived from the demand for that country's goods and services
a. True b. False Indicate whether the statement is true or false
Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of a textbook, by itself, will result in
a. a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles. b. a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles. c. an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles. d. an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.