An increase in the foreign one-year interest rate expected to occur in, say, two years will, all else fixed, have which of the following effects in a flexible exchange rate regime?
A) The real exchange rate will decrease with no change in the nominal exchange rate.
B) The nominal exchange rate will decrease with no change in the real exchange rate.
C) Both the real and nominal exchange rate will decrease.
D) No change in either the nominal or real exchange rate.
E) Both the real and nominal exchange rate will increase.
C
You might also like to view...
In the above figure, a regulation requiring average cost pricing would force the firm to produce at output level
A) Q1. B) Q2. C) Q3. D) Q4.
In the long run, firms will enter a perfectly competitive market if the existing firms are making:
A. a profit. B. zero profits. C. negative profits. D. Any of these could be true.
What is marginal factor cost? How is it related to the supply curve of an input?
What will be an ideal response?
Price leadership is a form of explicit collusion where one firm in an oligopoly announces a price change and expects all other firms to follow suit
Indicate whether the statement is true or false