If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar, how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?
A) 2.14 B) 2.24 C) 2.57 D) 4.76
Question 2
Suppose the government spending multiplier is 2. The federal government cuts spending by 40 billion. What is the change in GDP if the price level is not held constant?
A) a decrease of more than 80 billion
B) an increase of less than 80 billion
C) an increase equal to 80 billion
D) an increase of greater than 80 billion
E) a decrease of less than 80 billion
Cation binding and exchange.
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