Answer the following statements true (T) or false (F)
1. The purchasing-power-parity theory holds that exchange rates should equalize the inflation rates among the trading nations.
2. The expectations of speculators in the United States that the exchange rate for the euro will fall in the future will increase the supply of euros in the foreign exchange market and decrease the exchange rate for the euros.
3. If a nation has a balance of payments deficit and exchange rates are flexible, the price or value of that nation's currency in the foreign exchange markets will rise.
4. Fixed exchange rates usually provide more certainty to those engaged in international trade.
1. F
2. T
3. F
4. T
You might also like to view...
Describe the changes in the variables that will cause supply for a product to decrease, shifting the supply curve up and to the left
What will be an ideal response?
Suppose the quantity of money is greater than the quantity of money demanded. In the short run, what occurs to set the quantity of money equal to the quantity of money demanded?
What will be an ideal response?
Consumption smoothing refers to ________
A) the impact of future income on current consumption and of current income on future consumption B) the constancy of consumption over time C) the impact of current consumption on future income and of future consumption on current income D) the tendency of consumers to adopt similar spending habits
In the circular flow, savings specifically represents
a. households’ cash hoards. b. households’ bank savings account. c. households’ total accumulated dollars. d. total income minus consumption spending.