Considering the theory of purchasing power parity, if inflation in Mexico is 5% while prices in the U.S. are stable; we should expect over the period of a year:
A. the dollar to appreciate 5% relative to the peso.
B. the peso to appreciate 5% relative to the dollar.
C. the real exchange rate of U.S. goods / Mexican goods to appreciate 5%.
D. the nominal exchange rate to stay fixed.
Answer: A
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The HPAE (High Performance Asian Economies) countries
A) have all consistently supported free trade policies. B) have all consistently maintained import-substitution policies. C) have all consistently maintained non-biased efficient free capital markets. D) have all maintained openness to international trade. E) have all outperformed the U.S.
Exhibit 30-3 Costs of Eliminating:Firm A Firm B Firm C 1st ton of pollution$ 30 $ 50 $ 600 2nd ton of pollution$ 70 $ 90 $ 700 3rd ton of pollution$125 $150 $ 900 4th ton of pollution$200 $250 $1,300 Refer to Exhibit 30-3. What is the cost to Firm B of eliminating 2 tons of pollution?
A. $350 B. $250 C. $300 D. $140 E. $540
A firm is a price taker if it
A) always sells its output at the industry-determined price. B) takes consumer demand into consideration in setting its price. C) takes its production costs into consideration in setting its price. D) uses a pricing strategy to gain market share.
Which of the following does not reflect a positive rate of time preference?
a. People are willing to pay high prices to see new movies at first-run theaters. b. A bank pays interest on savings accounts. c. Ed puts money in his mattress for a rainy day. d. Dry cleaners that provide faster service can charge more. e. A college freshman parties all semester, then stays awake studying for 50 straight hours during final exam week.