A Guatemalan company exchanges quetzal (Guatemalan currency) for dollars and then uses the dollars to purchase construction equipment from a U.S. company. These transactions
a. increase Guatemalan net capital outflow, and increases U.S. net exports.
b. increase Guatemalan capital outflow, and decreases U.S. net exports.
c. decrease Guatemalan net capital outflow, and increases U.S. net exports.
d. decrease Guatemalan net capital outflow, and decreases U.S. net exports.
c
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Arbitrage in the foreign exchange market, international loans markets, and goods markets results in
A) purchasing power parity, interest rate parity and law of one price. B) purchasing power parity, interest rate parity and price parity. C) purchasing power parity, interest rate parity and round-trip profit. D) purchasing power parity, price parity and no round-trip profit.
Distinguish the concepts of comparative advantage and absolute advantage
What will be an ideal response?
Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?
a. The manager discriminates against women. b. Allen works the undesirable early morning shift. c. Allen has more experience and so more human capital. d. All of the above could be correct.
Economic stagnation coupled with high inflation is commonly called:
A. stagflation. B. inflationary stagnation. C. stagnatory growth. D. inflagnation.