If the exchange rate between the U.S. dollar and the European euro went from $1.20 US = 1 euro to $1.10 US = 1 euro, then
a. European goods have become less expensive for Americans.
b. American goods have become less expensive for Europeans.
c. American exports to Europe are likely to increase.
d. American imports from Europe are likely to decrease.
A
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Which of the following best describes the response of output as time passes to an increase in the saving rate?
a. The growth rate of output does not change. b. The growth rate of output increases and gets even larger as time passes. c. The growth rate of output increases and does not change as time passes. d. The growth rate of output increases, but diminishes to its former level as time passes.
A decrease in net exports
A. causes an increase in imports of the same size. B. causes GDP to decrease. C. causes GDP to increase. D. can cause GDP to either increase or decrease, depending on whether the exports are durable or nondurable.
Based on the theory of purchasing power parity, in the long run, currencies of countries with significant inflation will tend to:
A. be flexible. B. appreciate. C. have nominal exchange rates. D. depreciate.
Which of the following provides the clearest example of human capital?
A) Automated equipment that can be used without any accompanying human labor B) Corporate stock owned by individuals and families rather than institutions such as mutual funds or corporations C) Machinery that has been designed and constructed by human beings D) Tools that cannot be used effectively except in combination with workers E) The ability to read