If the Mexican nominal exchange rate does not change, but prices rise faster in Mexico than in all other countries, then the Mexican real exchange rate
a. does not change.
b. rises.
c. declines.
d. There is not enough information to answer the question
b
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If a used car dealer purchases a used car for $3,000, makes repairs and refurbishes it, then sells it for $8,000, the
a. dealer contributes value added equal to $5,000, but nothing is added to GDP. b. dealer contributes value added equal to $5,000, and consequently $5,000 is added to GDP. c. dealer contributes nothing to production because only existing goods are involved. d. dealer contributes value added equal to $8,000, but only $5,000 is added to GDP.
The money multiplier yielded by the deposit-creation formula assumes that
A. banks hold no excess reserves. B. banks hold excess reserves. C. recipients of loans take some of the proceeds in cash. D. recipients of loans do not redeposit their funds in other banks.