Assuming no change in the nominal exchange rate, how will a higher rate of inflation in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)
A) The real exchange rate will rise.
B) The real exchange rate will be unaffected.
C) The real exchange rate will fall.
D) The impact on the real exchange rate cannot be predicted.
A
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Answer the following statement(s) true (T) or false (F)
1. The future value (FV) of a dollar is its present value (PV) plus the opportunity cost of not using that dollar in the present period. 2. The term, 1/(1 + r)t is known as the discount rate, where r represents the discount factor. 3. Present value determination is a procedure that corrects a value for the rate of inflation. 4. The discount rate used for public policy decision making is called the social discount rate. 5. Deflating refers to the process of converting a real value into its nominal value.
Suppose that the exchange rate between the dollar and the peso changed from 6 pesos per dollar to 8 pesos per dollar. This change means that the
A) peso appreciated. B) dollar depreciated. C) peso depreciated. D) Both answers A and B are correct.
When a firm shuns other suppliers and chooses to produce an input internally.
A. Contracts B. Spot exchange C. Vertical integration D. Horizontal integration
Classical growth economists who applied the law of diminishing marginal productivity to capital concluded that:
A. output could grow indefinitely but per capita output could not. B. per capita output could grow indefinitely but output could not. C. both output and per capita output could grow indefinitely. D. neither output nor per capita output could grow indefinitely.