Changes in exchange rates are due to
A) real events only.
B) nominal events only.
C) both real and nominal events.
D) None of the above.
C
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If Bank A receives a new cash deposit of $150,000, and it has a required reserve ratio of 12 percent, how much money could potentially be created from that deposit?
a. $1,250,000 b. $18,000 c. $132,000 d. $150,000
Suppose that you have wheat in storage and that the price of wheat is currently $7.00 per bushel. You can sell your wheat immediately but you also have an opportunity to sell in six months. At that time, you believe the price of wheat will be $8.00 per bushel. Your cost of storage is $0.75 per bushel for six months. One dollar in six months is worth one dollar today (no time preference). What strategy is profit maximizing?
A. Hold onto your wheat and sell in six months. B. Sell your wheat today. C. Minimize your losses by exiting the wheat market. D. Expand production to sell more wheat.
Refer to the graph below. An increase in the supply of yen will result in:
Assume that Japan and the United States are engaged in a system of flexible exchange rates.
A. An appreciation of the yen
B. An appreciation of the U.S. dollar
C. A depreciation of the U.S. dollar
D. An increase in the dollar price of yen