If purchasing-power parity between France and the U.S. holds, but then U.S. prices rise,
a. the real exchange rate is above its purchasing-power parity value. An increase in the nominal exchange rate can move it back.
b. the real exchange rate is above its purchasing-power parity value. A decrease in the nominal exchange rate can move it back.
c. the real exchange rate is below its purchasing-power parity value. An increase in the nominal exchange rate can move it back.
d. the real exchange rate is below its purchasing-power parity value. A decrease in the nominal exchange rate can move it back.
b
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If a person is risk neutral, then she
A) is indifferent about playing a fair game. B) will pay a premium to avoid a fair game. C) has a horizontal utility function. D) has zero marginal utility of wealth.
An example of a seller in a financial market would be:
A. families buying new cars B. individuals who have a savings account. C. entrepreneurs starting new ventures. D. the government when it needs to finance public spending.