Suppose that the rate of inflation in Japan is 1 percent and the rate of inflation in the United States is 3 percent. If the real exchange rate remains constant, the value of the U.S. dollar relative to the yen must:

A. fall by 2 percent.
B. fall by 4 percent.
C. rise by 4 percent.
D. rise by 2 percent.


Answer: A

Economics

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The disposable income component of aggregate demand is equal to:

a. income before taxes. b. income after taxes. c. operating income. d. investment income.

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Refer to the information provided in Figure 2.5 below to answer the question(s) that follow. Figure 2.5Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is

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Economics