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Author Question: How would a decrease in the U.S. budget deficit affect the exchange rate in the market for dollars? ... (Read 78 times)

cnetterville

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on: Jun 29, 2018
How would a decrease in the U.S. budget deficit affect the exchange rate in the market for dollars?
 
  A) The exchange rate will not be affected by a change in the budget deficit.
  B) The exchange rate will decrease.
  C) The exchange rate will increase.
  D) The impact of the decrease in the budget deficit on the exchange rate cannot be predicted.

Question 2

Do food stamps affect the slope of the budget constraint of their recipients or rather shift the budget constraint? Explain.
 
  What will be an ideal response?


komodo7

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Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

The poor still face the same price for food. Therefore, their budget constraint has not changed slope but has merely shifted.


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