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If a bushel of wheat costs $10 in the United States and 5 pounds in the United Kingdom, the long-run exchange rate must be 1. A. 2 pounds per dollar. B. 2.5 dollars per pound. C. 1.5 pounds per dollar. D. 1.8 dollars per pound. E. None of the above.

If a bushel of wheat costs $10 in the United States and 5 pounds in the United Kingdom, the long-run exchange rate must be 1. A. 2 pounds per dollar. B. 2.5 dollars per pound. C. 1.5 pounds per dollar. D. 1.8 dollars per pound. E. None of the above.

Brief Principles of Macroeconomics (MindTap Course List)
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 7PA
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Given the above information, what is the initial current account balance for this economy? 3. A. Current account deficit of $205. 4 B. Current account deficit of $125. C. Current account surplus of $125. D. Current account surplus of $150. E. None of the above. Consider the above information. If government spending falls by $50, what is the change in the current account balance? 4. A. -$35 В. —$15 C. $10 D. $35 E. None of the above. Consider the above information. Beginning at the initial equilibrium output, suppose instead that exports rise by 50. What is the change in the current account balance? 5. A. –$25 В. $45 С. —$75 D. $35 E. None of the above.
Transcribed Image Text:Given the above information, what is the initial current account balance for this economy? 3. A. Current account deficit of $205. 4 B. Current account deficit of $125. C. Current account surplus of $125. D. Current account surplus of $150. E. None of the above. Consider the above information. If government spending falls by $50, what is the change in the current account balance? 4. A. -$35 В. —$15 C. $10 D. $35 E. None of the above. Consider the above information. Beginning at the initial equilibrium output, suppose instead that exports rise by 50. What is the change in the current account balance? 5. A. –$25 В. $45 С. —$75 D. $35 E. None of the above.
If a bushel of wheat costs $10 in the United States and 5 pounds in the United Kingdom, the long-run exchange rate must be 1. A. 2 pounds per dollar. B. 2.5 dollars per pound. C. 1.5 pounds per dollar. D. 1.8 dollars per pound. E. None of the above. Which of the following is an assumption of the monetary approach to the exchange rates? A. Purchasing power parity (PPP) holds. B. Uncovered interest parity (UIRP) holds. C. Prices are flexible. D. All of the above. E. Only A and C of the above. Use the following information to answer questions 3 - 5. Consider the following economy: s = 0.2 (marginal propensity to save) 0.2 (marginal propensity to import) I, = 500 (investment) Go = 300 (government spending) TX, = 200 (taxes) EX, I Mo m 400 (exports) 100 (autonomous import spending) %3D 2.
Transcribed Image Text:If a bushel of wheat costs $10 in the United States and 5 pounds in the United Kingdom, the long-run exchange rate must be 1. A. 2 pounds per dollar. B. 2.5 dollars per pound. C. 1.5 pounds per dollar. D. 1.8 dollars per pound. E. None of the above. Which of the following is an assumption of the monetary approach to the exchange rates? A. Purchasing power parity (PPP) holds. B. Uncovered interest parity (UIRP) holds. C. Prices are flexible. D. All of the above. E. Only A and C of the above. Use the following information to answer questions 3 - 5. Consider the following economy: s = 0.2 (marginal propensity to save) 0.2 (marginal propensity to import) I, = 500 (investment) Go = 300 (government spending) TX, = 200 (taxes) EX, I Mo m 400 (exports) 100 (autonomous import spending) %3D 2.
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