If a country's imports are greater than its exports, a country has a trade deficit.
Answer the following statement true (T) or false (F)
True
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When in 1985 a British pound cost approximately $1.30, a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker dollar, the same Shetland sweater would have cost
A) less than $130. B) more than $130. C) $130, since the exchange rate does not affect the prices that American consumers pay for foreign goods. D) $130, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar.
Currently, the strategy of the Social Security system is to run surpluses to prepare for the retirement of the baby boom generation. The effectiveness of this strategy is being undermined because
a. rising interest rates make it more expensive for Social Security to borrow. b. inflation is reducing the value of the Social Security surplus. c. the trust fund is being used to finance current government expenditures, and the bonds held by the trust fund are an obligation of the U.S. Treasury. d. the federal budget surplus reduces the Social Security surplus.
When the real exchange rate for the dollar appreciates, U.S. goods become
a. less expensive relative to foreign goods, which makes exports rise and imports fall. b. less expensive relative to foreign goods, which makes exports fall and imports rise. c. more expensive relative to foreign goods, which makes exports rise and imports fall. d. more expensive relative to foreign goods, which makes exports fall and imports rise.
Which statement is true?
A. Actual reserves - required reserves = excess reserves. B. Required reserves - actual reserves = excess reserves. C. Required reserves + actual reserves = excess reserves. D. None of the statements are true.