Following the economic crisis in 1994-1995, the Mexican peso fell sharply in value. What will be the main economic effects in Mexico of such an exchange rate change?
a. It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well.
b. It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well.
c. It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise and output may rise as well.
d. It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall and output may fall as well.
c
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Refer to Table 4.1, which shows Flo's and Rita's individual supply schedules for frozen latte-on-a-stick. Assuming Flo and Rita are the only suppliers in the market, what is the market quantity supplied at a price of $2?
A) 0 B) 2 C) 3 D) 5
A decrease in the domestic interest rate causes the demand for domestic assets to ________ and the domestic currency to ________, everything else held constant
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate