Which of the following would cause the nominal exchange rate to depreciate?
A) The real exchange rate appreciates.
B) The domestic inflation rate increases.
C) The foreign inflation rate increases.
D) The government budget deficit increases.
B
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Which of the following statements is TRUE?
a. The HeckscherOhlin model offers a reasonable explanation of the pattern of trade and the gains from trade. b. The HeckscherOhlin trade model does not offer an explanation of the pattern of trade. c. The HeckscherOhlin trade model does not offer an explanation of the gains from trade. d. The Riparian trade model (with labor as the only input) offers a better explanation of the pattern of trade and the gains from trade than the HeckscherOhlin model.
Refer to the scenario above. Which of the following will happen in equilibrium if the car dealer has a reputation of trustworthiness?
A) You will trust him and he will cooperate. B) You will trust him and he will defect. C) You will not trust him. D) You will earn positive consumer surplus.