Explain how each of the following will affect the relative values of the dollar and the euro used in France: • Income growth higher in the United States than in France. • Inflation higher in France than in the United States. • A real interest rate higher in the United States than in France
Income growth higher in the United States than in France: The increased U.S. income will lead to U.S. consumers buying more French goods. As a result, there will be an increase in the demand for euros causing the euro to appreciate in relation to the dollar. We could also say that the dollar will depreciate relative to the euro.
Inflation higher in France than in the United States: The higher inflation in France will cause a decrease in U.S. consumers' demand for French goods. As a result, there will be a decrease in the supply of dollars leading the dollar to appreciate relative to the euro.
A real interest rate higher in the United States than in France: The higher real interest rate in the U.S. will cause both U.S. investors and French investors to increase their investments in the U.S. The increased French investment in the U.S. will cause an increase in the demand for dollars and an appreciation of the dollar relative to the euro.
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Guiseppe Vibrato was so sick of his job that he quit, and now spends his days at the tavern, saying he never wants to work again. Guiseppe is
A) a discouraged worker. B) a discouraged drinker. C) unemployed. D) neither employed nor unemployed.
If the payoff to the United States to pursuing nuclear weapons is 100 if the USSR does not pursue nuclear weapons and 50 if they do, and the payoff to the USSR to pursuing nuclear weapons is 80 if the USA doesn't pursue nuclear weapons and 30 if they
do, what is the non-cooperative equilibrium? A) The USA pursues nuclear weapons, the USSR does not. B) The USA pursues nuclear weapons, the USSR pursues nuclear weapons. C) The USA does not pursue nuclear weapons, the USSR does not pursue nuclear weapons. D) The USA does not pursue nuclear weapons, the USSR does pursue nuclear weapons.
One common assumption in game theory is that firms
a. try to avoid the worst outcome b. try to achieve the best outcome c. minimize losses d. always cooperate e. always compete
Elasticity is
a. a measure of how much buyers and sellers respond to changes in market conditions. b. the study of how the allocation of resources affects economic well-being. c. the maximum amount that a buyer will pay for a good. d. the value of everything a seller must give up to produce a good.