In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price

The functional relationship between the trade balance and the real exchange rate is:

a. a negative, or decreasing, function. b. a positive, or increasing, function. c. a parabolic function. d. impossible to quantify because there are so many unknown variables.

Suppose that X and Y are substitutes. If the price of Y increases, how will this change the market equilibrium for X?

a. Equilibrium price and quantity both decline. b. Equilibrium price declines, and equilibrium quantity rises. c. Equilibrium price rises, and equilibrium quantity falls. d. Equilibrium price and quantity both rise.