What determines the real exchange rate and the nominal exchange rate in the short run?
What will be an ideal response?
The real exchange between the United States and Japan, RER, equals E ? P/P* where P is the U.S. price level, P* is the Japanese price level, and E is the nominal exchange rate in yen per dollar. In the short run, changes in the nominal exchange rate bring an equal change in the real exchange rate because the price levels in Japan and the United States do not adjust instantly to a change in the nominal exchange rate.
In the short run, the nominal U.S. exchange rate is determined in the foreign exchange market as the exchange rate that sets the quantity of U.S. dollars demanded equal to the quantity of U.S. dollars supplied.
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A change in the price level does not shift the aggregate demand curve
Indicate whether the statement is true or false
Many states have usury laws, which:
a. impose an upper limit on the interest rate that lenders can charge. b. impose a lower limit on the interest rate that lenders can charge. c. impose limits on how products can be used by consumers. d. impose an upper limit on the quantity of a product that can be sold.
Shares in XM Radio currently sell for $20. If the satellite it plans to launch works well, the share value will increase by $35. If the satellite fails to function, the share price will fall by $5. The expected return of the stock is
a. 25%. b. 50%. c. 75%. d. 100%.
Suppose there are only two goods (Good A and Good B) and the average person buys 4 of Good A in a year and 3 of Good B. If the Price of Good A is $5 and the Price of Good B is $10, the price of the market basket
A. is 50. B. is 20. C. is 30. D. is 100.