Suppose 1 U.S. dollar exchanges for 1 euro, and the price of a car imported from Germany is 50,000 euros. If next week the euro depreciates to 0.90 U.S. dollars to 1 euro, what will happen to the dollar price of the car for American consumers?
A. It will fall from $50,000 to $45,000.
B. It will fall from $55,556 to $50,000.
C. It will rise from $50,000 to $55,556.
D. It will rise from $45,000 to $50,000.
Answer: A
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a. wealth effect, exchange-rate effect, interest-rate effect b. exchange-rate effect, interest-rate effect, wealth effect c. interest-rate effect, wealth effect, exchange-rate effect d. interest-rate effect, exchange-rate effect, wealth effect
Compared to the perfect competitor, the monopolist is ______ efficient and charges a ______ price.
Fill in the blank(s) with the appropriate word(s).
Economists observed the following growth rates in the fourth quarter of 1995: real GDP = 2.8 percent; M1 = 7.8 percent; GDP deflator = 2.2 percent. Given this data, the growth of nominal GDP was approximately
A. 12.8 percent. B. 10.0 percent. C. 5.6 percent. D. 5.0 percent. E. 0.6 percent.
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