Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. If no price controls had been in
place, the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been
A) an increase in both price and quantity.
B) an increase in price and a decrease in quantity.
C) a decrease in price and an increase in quantity.
D) a decrease in both price and quantity.
B
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When a country's real exchange rate depreciates,
A) its nominal exchange rate must have appreciated. B) its nominal exchange rate must also have depreciated. C) it can trade its goods for fewer units of foreign goods. D) it can trade its goods for more units of foreign goods.
As the price of the U.S. dollar increases in terms of foreign currency,
a. U.S. products become cheaper for foreigners b. foreign goods become cheaper for Americans c. dollars are worth less d. the U.S. demand for foreign exchange increases e. the supply of foreign exchange to U.S. markets decreases