Answer the following statement(s) true (T) or false (F)
1. Increased taste for European goods in the United States leads to decreased demand for euros.
2. Any change in the average income of U.S. consumers will also change the equilibrium exchange rate, ceteris paribus.
3. When the dollar depreciates, this means that a dollar can buy more units of foreign currency than before.
4. If Europe experiences a higher inflation rate than does the United States, European products become less expensive to U.S. consumers.
5. Governments were unable to agree on an alternative fixed-rate approach when the Bretton Woods system collapsed.
1. False
2. True
3. False
4. False
5. True
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________ will lead to a decrease in the gross domestic product of a country, all other variables remaining unchanged
A) An increase in the expenditure on investment B) A decrease in the expenditure on investment C) An increase in exports D) A decrease in imports
When inflation occurs,
A) everyone (or almost everyone) is made worse off. B) only wealthy people can maintain their previous consumption levels. C) the cost of living rises. D) the prices of all goods rise in equal proportions. E) the purchasing power of money declines.