Holding all else constant, a decrease in the real interest rate on Mexican assets will ________ the supply for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. increase; increase
B. decrease; decrease
C. increase; decrease
D. decrease; increase
Answer: D
You might also like to view...
What is market failure?
What will be an ideal response?
When drawn against the real interest rate, the output supply curve is upward sloping because labor supply is
A) increasing in the real interest rate and labor demand is independent of the real interest rate. B) decreasing in the real interest rate and labor demand is independent of the real interest rate. C) independent of the real interest rate and labor demand is increasing in the real interest rate. D) independent of the real interest rate and labor demand is decreasing in the real interest rate.
Since an individual spends a small share of her income on salt, the elasticity of demand is likely to be low
a. True b. False Indicate whether the statement is true or false
If the MPC increase, the equilibrium levels of income and consumption will change in which of the following ways?
A) No change/No change B) No change/Increase C) Increase/No change D) Increase/Increase E) Decrease/Decrease