Suppose that the nominal exchange rate between the U.S. dollar and the Mexican peso is 0.10 dollars per peso. If Mexico's inflation is 10 percent and the United States' inflation is 0 percent, from the U.S. point of view, the real exchange rate
A) appreciates to 0.11 dollars per peso.
B) depreciates to 0.11 dollars per peso.
C) appreciates to 0.09 dollars per peso.
D) depreciates to 0.09 dollars per peso.
E) appreciates to 0.2 dollars per peso.
B
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In the circular flow model with the government sector, taxes
A) on households flow in the same direction as do the goods and services. B) on firms flow in the same direction as do factors of production. C) flow in the same direction as do transfers. D) flow from the goods market to the factor markets. E) flow in the opposite direction as do transfers.
Sellers who charge different prices to different customers can increase their net revenue
A) by forcing some customers to pay more for the product than it is worth to them. B) by getting high-price customers in effect to subsidize sales to low-price customers. C) if the demand of some customers for the product enables the sellers to build volume by selling at prices below marginal cost. D) if they can prevent customers from reselling to one another.
In a business cycle boom, we expect an unusually ________ proportion of actual income to be transitory, thus an unusually ________ MPC operating in the short run, which ________ the income multiplier for the short run
A) high, low, reduces B) high, low, increases C) high, high, reduces D) low, low, increases E) low, high, reduces
According to convergence theory, countries that start out poor should initially grow:
A. faster than ones that start out rich, and will eventually surpass their level of income. B. faster than ones that start out rich, but will eventually slow to the same growth rate. C. slower than ones that start out rich, but will eventually grow to the same growth rate. D. slower than ones that start out rich, and therefore will never reach a similar growth rate.