Suppose a U.S. importer purchases "Mexican Oaxaca" cheese for $500 . If the present exchange rate is Mexican peso (MXP) 10 per U.S. dollar, and the MXP appreciates 10 percent against the U.S. dollar between the date of purchase and the date of payment, then the peso value of the invoice when payment is due is:
a. MXP 500.
b. MXP 550.
c. MXP 4,500.
d. MXP 5,500.
e. MXP 4,450.
c
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Tight monetary policy raises the real interest rate, which ________ the demand for dollars, ________ the supply of dollars, and ________ the equilibrium value of the dollar.
A. decreases; decreases; decreases B. increases; increases; increases C. decreases; increases; increases D. increases; decreases; increases
The production possibilities frontier model assumes which of the following?
A) Production of any level of the two products that the economy produces is currently possible. B) Labor, capital, land, and natural resources are unlimited in quantity. C) The economy produces only two products. D) The level of technology is variable.
Suppose that a firm produces both bottled water and carbonated soft drinks. It is cheaper for this firm to produce both goods than it would be if they were produced by two separate firms. Further, as this firm increases its production levels, the average costs of producing both bottled water and carbonated soft drinks fall. This firm experiences:
A. economies of scope and diseconomies of scale. B. both economies of scope and economies of scale. C. both diseconomies of scope and diseconomies of scale. D. diseconomies of scope and economies of scale.
The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is ferry service across the English Channel. What would happen in the market for ferry service if fees for using the Chunnel were increased?
A. The demand for ferry service would increase. B. There would be a downward movement along the demand curve for transits through the Chunnel. C. The demand for ferry service would decrease. D. There would be an upward movement along the demand curve for transits through the Chunnel.