If a product constitutes a large portion of a consumer's income, demand will be more inelastic

Refer to Figure 19-7. At what level should the Indian government peg its currency to the dollar to make U.S. imports cheaper in India?

A) less than $.02/rupee B) equal to $.02/rupee C) greater than $.02/rupee D) $1/rupee

If the exchange rate is defined as the price of the foreign currency in terms of the domestic currency, an increase in the exchange rate:

a. increases domestic demand for foreign goods. b. makes domestic goods cheaper in the foreign markets. c. lowers net exports. d. lowers aggregate expenditure on domestic goods. e. increases the domestic country's external debt burden.