Suppose that an increase in a nation's income causes the nation's residents to buy more domestic and foreign goods. Given this, if U.S. residents experience an increase in income, but Mexican residents do not, it is likely that, ceteris paribus,
A) both the U.S. dollar and the Mexican peso will depreciate.
B) both the U.S. dollar and the Mexican peso will appreciate.
C) the U.S. dollar will depreciate and the Mexican peso will appreciate.
D) the U.S. dollar will appreciate and the Mexican peso will depreciate.
C
You might also like to view...
Refer to Table 9-6. Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to
A) 1.2 percent. B) 2.0 percent. C) 2.5 percent. D) 4.0 percent.
In September 2006, the Food and Drug Administration recommended that Americans avoid eating bagged raw spinach in the wake of an outbreak of E. coli bacteria
Following this recommendation, the food industry looked at alternatives and many turned to arugula. One Chicago distributor claimed, "The sale of the stuff has gone through the roof." Based on this information A) the cross-price elasticity between arugula and spinach is negative. B) the cross-price elasticity between arugula and spinach is positive. C) the price elasticity of arugula is positive while the price elasticity of spinach falls to zero. D) arugula is a normal good while raw spinach is an inferior good.