Suppose that over the past decade, U.S. inflation is greater than that in Mexico. Further assume that during this same period, the dollar appreciates relative to the Mexican peso. Given this information,
A) the real exchange rate remains unchanged.
B) the real exchange rate must decrease.
C) the real exchange rate must increase.
D) the real exchange rate can increase or remain the same, but not decrease.
E) the real exchange rate can decrease or remain the same, but not increase.
C
You might also like to view...
Answer the following statement(s) true (T) or false (F)
1. Patents have ambiguous welfare consequences because they both create monopoly power and promote inventive activity. 2. The competition among firms to acquire the rights to legal barriers to entry helps to reduce the welfare costs of monopoly. 3. Social gain is lowered when a monopoly begins to practice price discrimination. 4. When a simple profit-maximizing monopoly begins to practice second-degree price discrimination, both consumers and the monopoly will benefit. 5. Both first-degree price discrimination and the two-part tariff, when perfectly implemented, reduce consumers' surplus to zero.
Which of the following statements is true?
A. The prime rate is higher than the federal funds rate. B. The federal funds rate is higher than the prime rate. C. The prime rate is often the same as the discount rate. D. The federal funds rate and the prime rate are often the same.
A monopoly's marginal revenue is equal to the market price of its product
Indicate whether the statement is true or false
If the social benefit is greater than the private benefit in a particular market, then the private equilibrium will be at a quantity:
A. equal to the socially optimal level. B. greater than or less than the socially optimum level, depending on the size of the external costs. C. greater than the socially optimal level. D. less than the socially optimal level.