By how much does the real, bilateral exchange rate change when the nominal, bilateral exchange rate changes from $1.10/€ to $1.00/€, the U.S. tradable basket from $500 to $600 and the Euro-Area tradable basket from €550 to €580?
a. The real exchange rate rises approximately by 20%.
b. The real exchange rate rises approximately by 3%
c. The real exchange rate falls approximately by 3%
d. The real exchange rate falls approximately by 20%
e. The real exchange rate falls approximately by 18%
.D
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Clothing retailers have faced greater competition in recent years as more firms have entered the clothing market. Some of the competition has come from foreign competitors, but much of it is domestic competition
As a result there is much competition in markets for many types of clothing and A) individual buyers and sellers cannot affect the market price because it is determined by the market forces of demand and supply. B) there are no other implications. C) firms have a great degree of flexibility in pricing their products because these products can be sold at a high profit level. D) there are relatively few buyers and sellers in the market, and one individual firm can determine the market price.
If the Federal Reserve buys $500 of government securities when the required reserve ratio is 20 percent, the maximum potential change in the money supply is a(n)
A) increase by $100. B) increase by $2,500. C) decrease by $100. D) decrease by $2,500.
Centrally planned economies have historically been more damaging to the environment than capitalist ones.
Answer the following statement true (T) or false (F)
A possible reason a nation might impose a protectionist policy such as a tariff is to:
A. help domestic firms establish a world monopoly in a particular market. B. increase the level of imports. C. encourage specialization in the good in which the nation has a comparative advantage. D. increase the welfare of domestic consumers.