A term that categorizes patterns of exchange rate behavior is known as:
a. exchange rate regimes.
b. exchange rate realms.
c. exchange rate principles.
d. exchange rate observations.
Ans: a. exchange rate regimes.
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An internal economy means that ________, while an external economy means that ________
A) firm costs fall as firm output increases, firm costs fall as industry output increases B) firm costs fall as industry output increases, firm costs fall as firm output increases C) firm costs fall as firm output increases, firm costs rise as industry output increases D) firm costs fall as industry output increases, firm costs rise as firm output increases
Suppose that Mexico has external debt, and the value of the country's currency, the peso, falls. Which of the following is true?
A) The peso value of the loans will decrease as well. B) Mexico will find it easier to pay off its external debt. C) Mexico will declare bankruptcy. D) The cost of debt service will be higher.