What happens in the foreign exchange market if the U.S. interest rate increases? What is the effect on the exchange rate?
What will be an ideal response?
In the foreign exchange market, the increase in the U.S. interest rate increases the demand for dollars and the demand curve for dollars shifts rightward. The increase in the interest rate also decreases the supply of dollars and the supply curve of dollars shifts leftward. As a result, the exchange rate rises so that the dollar appreciates.
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Private businesses tend to spend too little on research and development, because ________
A) investments to increase the capital stock are a better way to boost productivity B) governments tend to spend too much on research and development C) patent laws make it difficult to reap the benefits of such spending D) technology is often nonexcludable
For a monopsony buyer, the marginal expenditure per unit of an input
A) exceeds the average expenditure per unit. B) is less than the average expenditure per unit. C) equals the average expenditure per unit. D) any of the above could be true.