Suppose 80% of U.S. trade is with England and the rest is with Japan. If the dollar rises by 10% against the pound and rises by 20% against the yen, what is the percentage change in the effective exchange rate of the United States?
a. -16%
b. -12%
c. -8%
d. -4%
Ans: b. -12%
You might also like to view...
Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________
A) decreases; they both benefit B) increases; they both benefit C) decreases; neither benefit D) increases; only one party benefits
In ____, each competing firm is determined to sell at a price that is lower than the prices of its rivals, often regardless of whether that price covers the pertinent cost
a. market skimming b. a monopoly c. a price war d. perfect competition
If fast food is an inferior good then:
A. the demand for fast food will fall as income falls. B. the demand for fast food will fall as income rises. C. the demand for fast food will fall as the price of fast food rises. D. the quantity of fast food demanded will rise as the price of fast food rises.
Keynesians:
A. accept the countercyclical policy of doing nothing, that is, allowing market forces to work. B. believe that the level of aggregate demand in the 1930s was sufficient to generate full employment. C. accept the fact that policymakers should eliminate inflation first before focusing on unemployment. D. focus on increasing aggregate demand in order to stimulate the economy.