Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4
(a) What is the nominal exchange rate?
(b) Suppose the real exchange rate rises by 10%, the inflation rate in the domestic country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change?
(c) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by 8%, and domestic inflation is 3%. What is the foreign inflation rate?
(a) 5
(b) 8%
(c) 0%
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The above figures show the market for gasoline. Which figure(s) shows the effect of a freezing cold winter which drives up the price of home heating oil (a substitute in production for gasoline because each is made from crude oil)?
A) Figure B B) Figure C C) Figure D D) Figures B and C
The Bureau of Labor Statistics defines a person as unemployed if he or she does not:
a. work full time. b. have a job but is actively seeking one. c. earn a wage above the minimum wage rate. d. earn enough income to be above the poverty level. e. work as much as he or she desires.
Offering employees an efficiency wage may: a. reduce turnover
b. attract the most productive workers. c. lead to a reduction in training costs. d. result in any of the above.
Rock Crushers Limited produces smaller rocks from larger rocks. As part of the production process, Rock Crusher Limited takes the below listed actions. Which is a capital investment?
A. Covering the payroll for their rock crushing technicians. B. Purchasing large rocks and crushing them into smaller rocks. C. Storing suitably crushed rock for future sales. D. Making interest payments on their bonds.