If the inflation rate in the U.S. is higher than in other countries, the value of the dollar in international currency markets will be expected to
A. remain unchanged.
B. rise.
C. fall.
C. fall.
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The output effect of a change in the wage rate on a firm's demand for labor input will be greater
a. the larger the share of labor costs in total costs and the greater the price elasticity of demand for output. b. the larger the share of labor costs in total costs and the smaller the price elasticity of demand for output. c. the larger the share of labor costs in total costs and the higher the quantity demanded. d. the smaller the possibilities of substituting capital for labor.
The General Agreement on Tariffs and Trade forms the legal and institutional foundation for the current multilateral trading system
a. True b. False
Define the terms recessionary gap and inflationary gap. Why do they occur?
Suppose the inflation rate of a country falls from 8 percent during 2002-2004 to 6 percent in 2005-2007, under the adaptive expectations hypothesis what will the expected rate of inflation at the beginning of 2008?
a. 2 percent b. 4 percent c. 6 percent d. 8 percent