In a fixed exchange rate system, an increase in the exchange rate at which a currency is pegged is called a(n)

Suppose country X currently produces widgets. Then it establishes a preferential trading agreement with country Y. Following the formation of the PTA, country X no longer produces widgets and imports widgets from country Y. What has occurred?

a. There is trade diversion and a welfare gain for both country X and country Y. b. There is trade diversion, a welfare gain for country Y, and a welfare loss for country X. c. There is trade creation and a welfare gain for both country X and country Y. d. There is trade creation, a welfare gain for country Y, and a welfare loss for country X.

Suppose the price of coffee falls. Other things constant, what will not happen?

A) People will consume more coffee. B) People will consume more cream. C) The demand for coffee will rise. D) The demand for cream will fall. E) More people will now consider drinking bottled water.