When we look at exchange rates btwn two countries, what is the relationship between the exchange rate expressed in units of the domestic currency and the exchange rate expressed in units of the foreign currency?
a. They are both equal to one.
b. They cancel each other out.
c. One is always the reciprocal of the other.
d. They can never coexist.
Ans: c. One is always the reciprocal of the other.
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In an imperfectly competitive industry
A. a single firm will be able to sell all of its output at whatever price it wants to charge. B. the government will always regulate the output price. C. a single firm has no control over the price of its output. D. a single firm has some control over the price of its output.
If potential output equals 8,000 and short-run equilibrium output equals 8,500, there is a(n) ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. recessionary; not change B. recessionary reduce C. recessionary; raise D. expansionary; raise
The nominal interest rate in Autarkia has risen sharply after a change in a government policy. How will this affect the economy if the wages in the country are downwardly rigid?
What will be an ideal response?
Refer to Table 9-11. Which country has a comparative advantage in producing hats?
A) Denmark B) Belize C) both countries D) neither country