There is demand for and supply of dollars and a demand for and supply of pesos. Under a flexible exchange rate system, if income growth in the United States is greater than income growth in Mexico, then
A) the demand for dollars will shift to the right and the demand for pesos will shift to the left.
B) the demand for pesos will shift to the right and the supply of dollars will shift to the left.
C) the demand for pesos will shift to the left and the supply of pesos will shift to the right.
D) the supply of pesos will shift to the right and the supply of dollars will shift to the right.
E) none of the above
E
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If a nation imports more than it exports, then its net exports are:
a. positive. b. negative. c. zero. d. unstable.
Which of the following statements represents a correct and sequentially accurate economic explanation?
A) The (U.S.) dollar appreciates, net exports rise, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. B) The interest rate falls, investment rises, total expenditures on goods and services rises, AD falls, and the AD curve shifts leftward. C) Wealth increases, consumption rises, total expenditures on goods and services rises, AD falls, and the AD curve shifts rightward. D) (Business) expectations about future sales become more positive, investment rises, total expenditures on goods and services rises, AD rises, and the AD curve shifts rightward. E) Foreign real national income rises, net exports rise, total expenditures on goods and services falls, AD rises, and the AD curve shifts rightward.
If the marginal propensity to consume for a nation is 0.8, it means:
a. consumers save 80% of their incomes. b. consumers spend 80% of their incomes. c. consumers pay 20% tax on their earnings. d. consumers decrease their spending by $0.80 for each $1 of a decrease in their income.
The main purpose of expansionary monetary policy is to reduce interest rates.
Answer the following statement true (T) or false (F)