Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 100 euros and the representative U.S. basket costs $125,
and the dollar/euro exchange rate is $0.75 per euro, then the price of the European basket in terms of U.S. basket is:
[(0.75 $/euro) (100 euro per a European basket)]/[(125 $/U.S. basket)] = 0.60 U.S. baskets/European basket.
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Cash held by a bank in its vault is a part of the bank's
A. liabilities. B. reserves. C. net worth. D. money supply.
When the Fed buys bonds through open market operations, it gives banks money in return, which:
A. increases their ability to lend, and increases aggregate demand. B. decreases their ability to lend, and increases aggregate demand. C. increases their ability to lend, and decreases aggregate demand. D. decreases their ability to lend, and decreases aggregate demand.
If national income is $100 billion, and MPC = 0.75, then autonomous consumption is ________ and MPS is ___________
a. $25 billion; 0.25 b. $75 billion; 0.75 c. unknown; 1.25 d. unknown; 0.25 e. $75 billion; 0.25
For this question, assume that firms' of productivity are accurate while workers' expectations of productivity adjust slowly over time. In this case, an increase in productivity will cause which of the following?
A) an increase in both the real wage and the natural rate of unemployment B) a decrease in both the real wage and the natural rate of unemployment C) an increase in the real wage and a reduction in the natural rate of unemployment D) a decrease in the real wage and an increase in the natural rate of unemployment E) none of the above