Citizens in India buy music from the U.S. To do so they use Indian rupees to purchase U.S. dollars. If U.S. citizens hold these rupees rather than spending them, what happens to U.S. net exports and U.S. net capital outflows?
a. both U.S. net exports and U.S. net capital outflow rise
b. both U.S. net exports and U.S. net capital outflow fall
c. U.S. net exports rise and U.S. net capital outflow fall
d. U.S. net exports fall and U.S. net capital outflow rise
a
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If a country bans the importation of a particular good, the market equilibrium is shown by the intersection of the foreign demand curve and the domestic supply curve
Indicate whether the statement is true or false
When the Fed fears inflation, the Fed ________ government securities, so that the federal funds rate ________ and the quantity of money ________
A) buys; rises; decreases B) sells; falls; increases C) buys; falls; increases D) sells; falls; decreases E) sells; rises; decreases
Contrast the sticky wage theory with the sticky price (menu cost) theory in a situation where the overall price level increases.
a. Under the sticky wage theory, producers expand production and sales because of higher profit margins, whereas under the sticky price theory, producers find their sales increasing because their prices are relatively lower. b. Under the sticky wage theory, producers find their sales increasing because their prices are relatively lower, whereas under the sticky price theory, producers expand production and sales because of lower profit margins. c. Under the sticky wage theory, producers reduce production and sales because of higher profit margins, whereas under the sticky price theory, producers find their sales decreasing because their prices are relatively lower. d. Under the sticky wage theory, producers find their sales decreasing because their prices are relatively lower, whereas under the sticky price theory, producers decrease production and sales because of higher profit margins.
When the supply and demand of currencies in the foreign exchange market determines their relative values, this is known as
A. fixed exchange rates. B. flexible exchange rates. C. appreciation. D. depreciation.