In practice, many U.S. import prices tend to rise by only around
A) 1/4 of a typical dollar depreciation over the following year.
B) 1/3 of a typical dollar depreciation over the following year.
C) 1/2 of a typical dollar depreciation over the following year.
D) 2/3 of a typical dollar depreciation over the following year.
E) 2/5 of a typical dollar depreciation over the following year.
Question 2
A devaluation of the home currency
A) makes foreign goods and services cheaper relative to those sold at home.
B) makes domestic goods and services more expensive relative to those sold abroad.
C) decreases demand and output.
D) increases demand for domestic goods and services.
E) increases output and makes domestic goods and services cheaper relative to those sold abroad.
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