Author Question: An appreciation of the U.S. dollar A) makes our exports more expensive in terms of foreign ... (Read 31 times)

B · **on:** Jun 30, 2018

An appreciation of the U.S. dollar

A) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports.
B) makes our exports more expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports.
C) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, increasing net exports.
D) makes our exports less expensive in terms of foreign currency and imports cheaper in terms of the dollar, decreasing net exports.

Question 2

Suppose an economy's money supply is fixed at 4,000 and its nominal GDP is 800,000. Calculate the velocity of money.

What will be an ideal response?

harveenkau8139 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

B

Answer to Question 2

According to the quantity theory of money, the velocity of money is obtained by dividing nominal GDP by money supply. In this case, the velocity of money is 800,000/4,000 = 50.