Discuss the effects of a rise in the interest rate paid by euro deposits on the exchange rate
What will be an ideal response?
There are two effects to consider. If we make the unrealistic assumption that the expected exchange rate will not change, then a rise in the interest rate paid by Euro deposits causes the dollar to depreciate. However, if the expected exchange rate were to rise, then the current exchange rate would also rise. (See Figure 14-6 from the text.)
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Which of the following statements is false?
A) Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. B) Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. C) Not all sectors of the U.S. economy are affected equally by international trade. D) Most of the leading exporting countries are large, high-income countries.
Exhibit 30-3 Costs of Eliminating:Firm A Firm B Firm C 1st ton of pollution$ 30 $ 50 $ 600 2nd ton of pollution$ 70 $ 90 $ 700 3rd ton of pollution$125 $150 $ 900 4th ton of pollution$200 $250 $1,300 Refer to Exhibit 30-3. What is the cost to Firm B of eliminating 2 tons of pollution?
A. $350 B. $250 C. $300 D. $140 E. $540