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 115 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
Gracias!

sarah_brady415

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Anti-aging claims should not ever be believed. There is no supplement, medication, or any other substance that has been proven to slow or stop the aging process.

Did you know?

Many supplement containers do not even contain what their labels say. There are many documented reports of products containing much less, or more, that what is listed on their labels. They may also contain undisclosed prescription drugs and even contaminants.

Did you know?

The National Institutes of Health have supported research into acupuncture. This has shown that acupuncture significantly reduced pain associated with osteoarthritis of the knee, when used as a complement to conventional therapies.

Did you know?

In 1864, the first barbiturate (barbituric acid) was synthesized.

Did you know?

Everyone has one nostril that is larger than the other.

Greater Swiss Mountain Dog Greater Swiss Mountain Dog
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 ...
Past Vegetation Past Vegetation
Area of the hypoxic in The Gulf of Mexico’s “Dead Zone” Area of the hypoxic in The Gulf of Mexico’s “Dead Zone”
Areas of the United States, Mexico, and Cuba will be affected by a rise of just 100 cm Areas of the United States, Mexico, and Cuba will be affected by a rise of just 100 cm
The first pioneer species arrived less than a decade after the eruption. The first pioneer species arrived less than a decade after the eruption.
Video: Nervous pathway to the Neuromuscular (NMJ)

For a complete list of videos, visit our video library