Under a system of floating Exchange rates, relatively low productivity and high inflation rates in the United States result in:

Related MCQs

• Given a system of floating Exchange rates, falling income in the United States would trigger:
• Assume that the United States faces an 8 percent inflation rate while no (zero) inflation existsin Japan. According to the purchasing-power-parity theory, the dollar would be expected to:
• Low real interest rates in the United States tend to:
• If the exchange rate is above the equilibrium level then in a floating exchange rate system:
• If the exchange rate is below the equilibrium level then in a floating exchange rate system:
• If Canada runs a current account surplus and exchange rates are floating:
• Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land. Note that wages are the returns to labor and rents are the returns to land. According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B.
• Countries H and F operate in an H-O world. Each country produces two goods, A and B. Good A is relatively capital intensive and country F is relatively labor abundant. Suppose however, that the production technology is not the same in the two countries. That is, H has a superior technology of production compared to F.
• If relatively capital-abundant country A opens trade with relatively labor- abundant country B an the trade takes place in accordance with the Heckscher-Ohlin Theorem. What would be the consequence for factor prices (w/r) in the two countries?
• Suppose Mexico and the United States were the only two countries in the world. There exists anexcess supply of pesos on the foreign exchange market. This suggests that: