This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Suppose that over the past decade, U.S. inflation is greater than that in Mexico. Further assume ... (Read 67 times)

luminitza

  • Hero Member
  • *****
  • Posts: 555
on: Jun 30, 2018
Suppose that over the past decade, U.S. inflation is greater than that in Mexico. Further assume that during this same period, the dollar appreciates relative to the Mexican peso. Given this information,
 
  A) the real exchange rate remains unchanged.
  B) the real exchange rate must decrease.
  C) the real exchange rate must increase.
  D) the real exchange rate can increase or remain the same, but not decrease.
  E) the real exchange rate can decrease or remain the same, but not increase.

Question 2

Explain what effect an increase in the unemployment rate will have on the real wage based on: (1 ) the WS relation; and (2 ) the PS relation.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Hikerman221

  • Sr. Member
  • ****
  • Posts: 346
Reply #1 on: Jun 30, 2018
Answer to Question 1

C

Answer to Question 2

An increase in the unemployment rate will decrease bargaining power, decrease the nominal wage, and therefore decrease the real wage based on wage setting behavior. Changes in the unemployment rate have no effect on the real wage based on price setting behavior.


luminitza

  • Member
  • Posts: 555
Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

flexer1n1

  • Member
  • Posts: 373
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

You should not take more than 1,000 mg of vitamin E per day. Doses above this amount increase the risk of bleeding problems that can lead to a stroke.

Did you know?

About 80% of major fungal systemic infections are due to Candida albicans. Another form, Candida peritonitis, occurs most often in postoperative patients. A rare disease, Candida meningitis, may follow leukemia, kidney transplant, other immunosuppressed factors, or when suffering from Candida septicemia.

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

Did you know?

Increased intake of vitamin D has been shown to reduce fractures up to 25% in older people.

Language is the basis of human culture around the world. The past decade has seen major developments ... Language is the basis of human culture around the world. The past decade has seen major developments ...
Ansel Adams, Moonrise, Hernandez, New Mexico. Ansel Adams, Moonrise, Hernandez, New Mexico.
In the past year, about one in five adults in the United States reported symptoms of anxiety ... In the past year, about one in five adults in the United States reported symptoms of anxiety ...
The more air and fuel that can be packed in a cylinder, the greater the density of the air–fuel ... The more air and fuel that can be packed in a cylinder, the greater the density of the air–fuel ...
Area of the hypoxic in The Gulf of Mexico’s “Dead Zone” Area of the hypoxic in The Gulf of Mexico’s “Dead Zone”
Video: Optic Nerve and Optic Disk Animation (Part 1 of 2)

For a complete list of videos, visit our video library