Assume the nominal dollar-per-euro ($/€) exchange rate appreciates by 2%, U.S. prices rise by 5% and Euro-Area prices rise by 3%. By approximately how much does the real exchange rate change?

Omar and John can fix computers or write computer programs. The table above shows the number of computers they can fix and the lines of code they can write in a day

a. Who, if anyone, has the absolute advantage? b. Who has the comparative advantage in fixing computers? Why? c. Who has the comparative advantage in writing programs? Why?

Suppose the economy is at point B. If a recession in another country decreases exports, to what point might economy move in the short run?

A) It stays at point B. B) It shifts to a point such as A. C) It shifts to a point such as C. D) None of the above answers are correct because it is the SAS curve that shifts, not the AD curve.