Suppose that the real exchange rate between the United States and Brazil is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate (that is increase the number of baskets of Brazilian goods a basket of U.S. goods buys)?
a. an increase in the quantity of Brazilian currency that can be purchased with a dollar
b. a decrease in the price of U.S. goods
c. an increase in the price in Brazilian currency of Brazilian goods
d. All of the above are correct.
a
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Changing the labels on isoquants without changing the shapes of the isoquants implies no change in the underlying technology so long as the ordering of isoquants is preserved.
Answer the following statement true (T) or false (F)
The most that someone would pay today to receive a certain sum at some point in the future is known as
A) the interest rate. B) present value. C) future value. D) economic profit.
If Janet Yellen, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar?
a. The value of the dollar falls when US interest rates rise. b. The value of the dollar rises when US interest rates rise. c. The value of the dollar is not related to US interest rates. d. This is known as Purchasing Power Parity or PPP. e. The Federal Reserve has no impact at all on interest rates.
An industry is said to be a natural monopoly when:
a. legal barriers limit entry into the market. b. diseconomies of scale are present in the market. c. the market demand for the product supplied by a firm is inelastic. d. long-run average cost continues to decline as the quantity of output increases.