"In the foreign exchange market, if the demand for the U.S. dollar increases, the U.S. dollar appreciates in value." Briefly explain whether the previous statement is correct or incorrect
What will be an ideal response?
The statement is correct. The increase in the demand for dollars shifts the demand curve for dollars rightward and creates a shortage of dollars at the initial exchange rate. This shortage puts upward pressure on the exchange rate and so the exchange rate rises to its new equilibrium value.
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Technological changes that increase the productivity of skilled workers relative to that of unskilled workers are referred to as:
A) skill-biased technological changes. B) labor-saving technological changes. C) unskilled-biased technological changes. D) labor-complementary technological changes.
When the price of candy bars is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600 . Given this information and using the midpoint method, we know that the demand for candy bars is
a. inelastic. b. elastic. c. unit elastic. d. perfectly inelastic.