Explain the purpose of the following figure
What will be an ideal response?
To show that spot and forward exchange rates are in general close to each other.
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Two-dimensional graphs have a horizontal and a vertical axis and are used in economics to illustrate
A) relationships between two economic variables. B) a pie chart. C) a flow chart. D) one variable.
According to the purchasing power parity, if the price level in the US rises relative to Mexico
a. The dollar will appreciate relative to the peso b. The dollar will depreciate relative to the peso c. There is no effect on either currency d. None of the above
Most economists agree that modest inflation is desirable over zero inflation because:
A. it helps firms to more easily adjust real wages. B. it allows a margin of error for those deciding on the money supply. C. it allows the Fed to more easily engage in expansionary monetary policy. D. All of these statements are true.
Refer to Figure 17.2. Ceteris paribus, if the economy produces at point C, which of the following is most likely?
A. The PPC will not shift in the future. B. The PPC will shift outward in the future. C. The economy will continue to have point C as a choice in the future. D. The PPC will shift inward in the future.