This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Suppose that over the past decade, U.S. inflation is greater than that in Mexico. Further assume ... (Read 48 times)

luminitza

  • Hero Member
  • *****
  • Posts: 555
on: Jun 30, 2018
Suppose that over the past decade, U.S. inflation is greater than that in Mexico. Further assume that during this same period, the dollar appreciates relative to the Mexican peso. Given this information,
 
  A) the real exchange rate remains unchanged.
  B) the real exchange rate must decrease.
  C) the real exchange rate must increase.
  D) the real exchange rate can increase or remain the same, but not decrease.
  E) the real exchange rate can decrease or remain the same, but not increase.

Question 2

Explain what effect an increase in the unemployment rate will have on the real wage based on: (1 ) the WS relation; and (2 ) the PS relation.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Hikerman221

  • Sr. Member
  • ****
  • Posts: 346
Reply #1 on: Jun 30, 2018
Answer to Question 1

C

Answer to Question 2

An increase in the unemployment rate will decrease bargaining power, decrease the nominal wage, and therefore decrease the real wage based on wage setting behavior. Changes in the unemployment rate have no effect on the real wage based on price setting behavior.


luminitza

  • Member
  • Posts: 555
Reply 2 on: Jun 30, 2018
:D TYSM

T4T

  • Member
  • Posts: 348
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Malaria mortality rates are falling. Increased malaria prevention and control measures have greatly improved these rates. Since 2000, malaria mortality rates have fallen globally by 60% among all age groups, and by 65% among children under age 5.

Did you know?

Essential fatty acids have been shown to be effective against ulcers, asthma, dental cavities, and skin disorders such as acne.

Did you know?

The training of an anesthesiologist typically requires four years of college, 4 years of medical school, 1 year of internship, and 3 years of residency.

Did you know?

Human stomach acid is strong enough to dissolve small pieces of metal such as razor blades or staples.

Did you know?

To maintain good kidney function, you should drink at least 3 quarts of water daily. Water dilutes urine and helps prevent concentrations of salts and minerals that can lead to kidney stone formation. Chronic dehydration is a major contributor to the development of kidney stones.

Past and Future Use of Aggregate Past and Future Use of Aggregate
Rate of Residential Change, Past Year, in the United States Rate of Residential Change, Past Year, in the United States
Average Global Temperature Rise over the Past Century Average Global Temperature Rise over the Past Century
In the past year, about one in five adults in the United States reported symptoms of anxiety ... In the past year, about one in five adults in the United States reported symptoms of anxiety ...
Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ... Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ...
Greater Long-nosed Tree Shrew (Tupaia tana), Borneo and Sumatra. Greater Long-nosed Tree Shrew (Tupaia tana), Borneo and Sumatra.
Video: Major Elements in Biological Molecules: Carbohydrates

For a complete list of videos, visit our video library