Suppose that short-term real interest rates fall in Japan. Is this likely to be good news or bad news for the tourism industry in Hawaii?
What will be an ideal response?
Good news, unless short-term real interest rates decline in the United States as well. If short-term real interest rates in Japan fall relative to short-term real interest rates in the United States, the value of the yen should decline relative to the dollar. This will lower the yen price of vacations in Hawaii.
You might also like to view...
A decision by Congress to reduce spending in order to balance the government's budget is an example of ________ policy.
A. structural B. aggregation C. fiscal D. monetary
How does a quota affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?
What will be an ideal response?
Consider the stock of ocean tuna which is massively overfished. It is rational for an individual to exploit the resource rather than to conserve the stock because
A) the marginal private benefit of harvesting tuna is lower than the marginal social benefit of harvesting it. B) the marginal private cost of harvesting the fish is lower than the marginal social cost. C) the marginal social cost of harvesting the fish is lower than the marginal private cost. D) the marginal private benefit of harvesting tuna is higher than the marginal social benefit of harvesting it.
When considering changes in tax policy, economists usually focus on
A) people's ability to pay taxes. B) the marginal tax rate. C) the average tax rate. D) people's willingness to pay taxes.