Which of the following is likely to be true of the nominal and the real exchange rates in the short run and in the long run, if prices in two countries do not respond to exchange rate changes?
A) The real exchange rate and the nominal exchange rate between the currencies move proportionally in both the short run and the long run.
B) The real exchange rate and the nominal exchange rate between the currencies move proportionally in the short run but not in the long run.
C) The real exchange rate and the nominal exchange rate between the currencies remain constant.
D) The real exchange rate and the nominal exchange rate between the currencies move proportionally in the long run but not in the short run.
B
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According to the graph shown, the profits at point A are:
A. higher than those at point B.
B. lower than those at point B.
C. the same as those at point B.
D. higher than those at point C.
One likely result of a price ceiling is that:
A. a surplus of product would result. B. the price charged in the market would be above the equilibrium price. C. the price charged in the market would be the equilibrium price. D. the available product must be rationed.
If a good is considered a normal good, the demand curve will shift ________ when income increases because ________
A) right; the income and substitution effects move in the same direction. B) right; the income and substitution effects move in the opposite direction. C) left; the income and substitution effects move in the same direction. D) left; the income and substitution effects move in the opposite direction.
How would a decrease in the U.S. budget deficit affect the exchange rate in the market for dollars?
A) The exchange rate will not be affected by a change in the budget deficit. B) The exchange rate will decrease. C) The exchange rate will increase. D) The impact of the decrease in the budget deficit on the exchange rate cannot be predicted.