If exchange rates are fixed, then a decrease in Finland's export prices causes
A. U.S. import prices to fall.
B. Finland's import prices to rise.
C. U.S. import prices to rise.
D. Finland's import prices to fall.
Answer: A
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The United States produces more services than goods
Indicate whether the statement is true or false
One disadvantage of a fixed exchange rate system compared to a floating or managed float exchange rate system is
A) it more difficult for central banks to control inflation. B) it does not allow for government intervention. C) it can worsen inflation if domestic prices of imports rise quickly. D) it eliminates the possibility of depreciation during a recession.
The market power for a firm in the Cournot model will be greater
A) if the market demand is more elastic. B) if there are fewer firms in the industry. C) if market demand is higher. D) the more output this firm produces.
The Fed typically increases the money supply by
a. selling government bonds b. buying government loans c. selling government loans d. printing more currency e. buying government bonds