Author Question: Refer to the above table. Suppose the U.S. government (but not Europe) offers a 10 million subsidy? ... (Read 37 times)

nelaaney · **on:** Jun 30, 2018

Refer to the above table. Suppose the U.S. government (but not Europe) offers a 10 million subsidy?

What will be an ideal response?

Question 2

The monetary approach makes the general prediction that

A) the exchange rate, which is the relative price of American and European money, is fully determined in the long run by the relative supplies of those monies.
B) the exchange rate, which is the relative price of American and European money, is fully determined in the short run by the relative supplies of those monies and the relative demands for them.
C) the exchange rate, which is the relative price of American and European money, is fully determined in the short run and long run by the relative supplies of those monies and the relative demands for them.
D) the exchange rate, which is the relative price of American and European money, is fully determined in the long run by the relative supplies of those monies and the relative demands for them.
E) the money supply in the U.S. will adjust to European monetary equilibrium.

sultana.d · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

In this case Airbus would decide not to enter the market since it knows Boeing will, and that therefore its own production will entail a loss of 5 million.

Answer to Question 2

D