If real income rises in the economy and, at the same time, productivity in the agriculture sector rises, too, then it follows that the demand for food will
A) rise (assuming that income elasticity of demand for food is greater than 1 ) and the supply of food will remain constant.
B) rise (assuming that income elasticity of demand for food is greater than 0 ) and the supply of food will increase, too.
C) fall (assuming that income elasticity of demand for food is greater than 1 ) and the supply of food will fall, too.
D) fall (assuming that income elasticity of demand for food is equal to 1 ) and the supply of food will rise.
E) none of the above
B
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An exchange rate arrangement with a free market determined floating exchange rate for capital account transactions and a fixed exchange rate for current account transactions is called
A) capital-current account exchange rate system. B) dual exchange rate system. C) managed exchange rate system. D) crawling peg exchange rate system.
The product of nominal GDP and the GDP deflator equals the real GDP of a country
a. True b. False Indicate whether the statement is true or false