Refer to the figure above. When the real exchange rate is below ...

[ap345]

Refer to the figure above. When the real exchange rate is below R:
 
  A) net exports are negative.
  B) net exports are positive.
  C) net exports can be positive or negative depending on the value of R.
  D) net exports are zero.

Question 2

The quantity of labor demanded by a firm depends upon
 
  A) the nominal wage rate not the real wage rate.
  B) the real wage rate not the nominal wage rate.
  C) both the real wage rate and the nominal wage rate.
  D) neither the real wage rate nor the nominal wage rate.
  E) either the real wage rate or the nominal wage rate, depending whether the price level is increasing or decreasing.

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Answer to Question 1

B

Answer to Question 2

B