Explain how each of the following will affect the relative values of the dollar and the French franc: a. Income growth higher in the United States than in France. b. Inflation higher in France than in the United States. c. A real interest rate higher in the United States than in France.

a) Income growth in the US more than that of France will lead to more demand for the US dollar in…

Answered: Explain how each of the following will…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 5PA

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Explain how each of the following will affect the relative values of the dollar and the French franc:

	a. Income growth higher in the United States than in France.
	b. Inflation higher in France than in the United States.
	c. A real interest rate higher in the United States than in France.

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