How Will the Exchange Rate (Foreign Currency Per Dollar)respond to an Increase

question 106

Multiple Choice

How will the exchange rate (foreign currency per dollar) respond to an increase in preference for imported goods in the United States in the long run?

• A)Exchange rates will rise.
• B)Exchange rates will fall.
• C)Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States,both in the short run and in the long run.
• D)The exchange rate will be affected in the short run,but not in the long run.

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Definitions:

Cyclical Unemployment

Unemployment that rises during economic downturns and falls when the economy improves, directly related to cycles of economic upturn and downturn.

Natural Rate

The long-term unemployment rate around which the labor market is considered to be in balance, where the number of people seeking jobs equals the number of jobs available.

Expansionary Gap

A situation in macroeconomics where the real GDP is higher than the potential GDP, leading to inflationary pressures.

Resource Prices

The costs associated with acquiring the inputs needed for production, such as raw materials, labor, and capital.