Assume the nominal dollar-per-euro ($/€) exchange rate appreciates by 2%, U.S. prices rise by 5% and Euro-Area prices rise by 3%. By approximately how much does the real exchange rate change?

The Bretton Woods Agreement

A) fixed the value of the U.S. dollar relative to gold. B) fixed the value of the U.S. dollar relative to the euro. C) required foreign central banks to hold certain minimum amounts of gold as foreign exchange reserves. D) required member nations, other than the United States, to disband their central banks.

The total cost of producing one unit is $50. The total cost of producing two units is $75. At a production level of two units, the cost function exhibits

A) economies of scale. B) rising average costs. C) increasing marginal costs. D) constant returns to scale.