If the real exchange rate rises 2%, domestic inflation is 3%, and foreign inflation is 1%, what is the percent change in the nominal exchange rate?
A) 6%
B) 4%
C) 2%
D) 0%
D
You might also like to view...
Jack wants to buy a new house. But the surge in housing demand over the last few months has led to a sharp increase in housing prices making it impossible for him to afford one on his current income. This is an example of a ________
A) positive externality B) negative externality C) pecuniary externality D) conspicuous externality
In 1995, the General Agreement on Tariffs and Trade (GATT), which was established in 1948, was replaced by the World Trade Organization (WTO). Why did members of the GATT push for the establishment of the WTO?
A) The GATT agreement only covered trade in goods. The WTO was created to cover trade in goods, services, and intellectual property. B) By 1995 tariffs had been eliminated. The WTO was created to reduce non-tariff trade barriers. C) The charter of the GATT had run out and a new organization was needed to promote international trade. D) The creation of the European Union (EU) made the GATT obsolete. The WTO was formed to regulate trade between the EU and other nations.
Incentive problems are usually
A. smaller when the decision rights are placed lower in the organization. B. large regardless of where the decision rights are placed. C. larger when the decision rights are placed higher in the organization. D. larger when the decision rights are placed lower in the organization.
If inflation is slow to change after an increase in the growth rate of spending, then:
A. real growth must decrease. B. real growth must increase. C. interest rates must decrease. D. interest rates must increase.