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3. Multiple Choice Question. If exchange rates are al- lowed to fluctuate freely and the euro-area countries' demand for Indian rupees increases, which of the following will most likely occur? A. The rupee price of euro-area goods will increase. B. The euro-area balance-of-payments surplus will increase. C. The euro price of rupees will fall. D. The euro price of Indian goods will increase.

3. Multiple Choice Question. If exchange rates are al- lowed to fluctuate freely and the euro-area countries' demand for Indian rupees increases, which of the following will most likely occur? A. The rupee price of euro-area goods will increase. B. The euro-area balance-of-payments surplus will increase. C. The euro price of rupees will fall. D. The euro price of Indian goods will increase.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter29: International Finance
Section: Chapter Questions
Problem 8P
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3. Multiple Choice Question. If exchange rates are al- lowed to fluctuate freely and the euro-area countries' demand for Indian rupees increases, which of the following will most likely occur? A. The rupee price of euro-area goods will increase. B. The euro-area balance-of-payments surplus will increase. C. The euro price of rupees will fall. D. The euro price of Indian goods will increase. 4. Multiple Choice Question. Which of the following are likely the short-run effects of an increase in the reserve requirements (A0 > 0)? (Assume that the economy is ini- tially at the natural level.)¹ A. Yn(-), C(L), Y(↓), I(4), i(t) B. Y(4), C(-), Y(↓), I(?), (-) C. Y, (?), C(4), Y(?), I(-), (4) D. Y, (t), C(?), y(t). I(†), i(t)
Transcribed Image Text:3. Multiple Choice Question. If exchange rates are al- lowed to fluctuate freely and the euro-area countries' demand for Indian rupees increases, which of the following will most likely occur? A. The rupee price of euro-area goods will increase. B. The euro-area balance-of-payments surplus will increase. C. The euro price of rupees will fall. D. The euro price of Indian goods will increase. 4. Multiple Choice Question. Which of the following are likely the short-run effects of an increase in the reserve requirements (A0 > 0)? (Assume that the economy is ini- tially at the natural level.)¹ A. Yn(-), C(L), Y(↓), I(4), i(t) B. Y(4), C(-), Y(↓), I(?), (-) C. Y, (?), C(4), Y(?), I(-), (4) D. Y, (t), C(?), y(t). I(†), i(t)
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