There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. If the inflation rate in the United States rises relative to the inflation rate in Mexico, it follows that
A) the dollar will appreciate and the peso will depreciate.
B) both the dollar and the peso will appreciate, although the peso will appreciate before the dollar appreciates.
C) the dollar will depreciate and the peso will appreciate.
D) both the dollar and the peso will depreciate, although the peso will depreciate before the dollar depreciates.
E) There is not enough information to answer the question.
C
You might also like to view...
If a meteorologist discovers a new warming pattern is developing, and the new pattern will create a much larger-than-expected soybean harvest, she should ________ soybean futures
Other things constant, she is more likely to profit from her decision when ________ people are aware of the warming pattern and its consequences. A) buy; fewer B) sell; fewer C) sell; more D) buy; more
If we know that the supply curve for good x fails to reflect the total cost to society of producing that good, then we know that
a. the market for good x is characterized by an externality, but we cannot determine whether the externality is positive or negative from this fact alone. b. the market for good x is characterized by a positive externality. c. the market for good x is characterized by a negative externality. d. the demand curve for good x fails to reflect the value to society of that good.
Which of the following is the formula for the elasticity of Y with respect to X?
A. E = (percent change in Y)/( percent change in X) B. E = (percent change in X)/(percent change in Y) C. E = (change in Y)/(change in X) D. E = (change in X)/(change in Y)
Economists assume people behave rationally, which means that people
A) never make a mistake. B) do not intentionally make decisions that make themselves worse off. C) have the necessary information to always make correct decisions. D) always understand the consequences of their decisions.