When the nominal exchange rate falls
A) the domestic currency buys more units of foreign currency and the domestic currency has depreciated.
B) the domestic currency buys fewer units of foreign currency and the domestic currency has depreciated.
C) the domestic currency buys more units of foreign currency and the domestic currency has appreciated.
D) the domestic currency buys fewer units of foreign currency and the domestic currency has appreciated.
B
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Suppose Jason owns a small pastry shop. Jason wants to maximize his profit, and thinking back to the microeconomics class he took in college, he decides he needs to produce a quantity of pastries which will minimize his average total cost
Will Jason's strategy necessarily maximize profits for his pastry shop? A) No; In order to maximize profit, Jason would never want to produce the quantity where average total cost is minimized. B) Yes; Since Jason's pastry shop is in a perfectly competitive market, the only way to maximize profit is to produce the quantity where average total cost is minimized. C) Not necessarily; Depending on demand, Jason may maximize profit by producing a quantity other than that where average total cost is at a minimum. D) Not necessarily; This strategy will only maximize Jason's profit in the long run, but not in the short run.
Why might firms pay wages that are above the equilibrium wage in a market?
A) to increase the productivity of their workers B) to reduce the unemployment rate C) to encourage workers to form labor unions D) to reduce profit