Author Question: Suppose that over the past decade, U.S. inflation is less than that in Mexico. Further assume that ... (Read 74 times)

kshipps · **on:** Jun 30, 2018

Suppose that over the past decade, U.S. inflation is less than that in Mexico. Further assume that during this same period, the dollar depreciates 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

Which of the following statements about wage setting is true?

A) most workers in the U.S. have their wages set by formal contracts.
B) formal contracts play a more important role in Japan and Western Europe than in the United States.
C) the minimum wage in the U.S. is about 75 of the average wage.
D) all of the above