Figure 19-7 -Refer to Figure 19-7.Which of the Following Is True

question 123

Multiple Choice

Figure 19-7
-Refer to Figure 19-7.Which of the following is true?

• A)U.S.imports are more expensive at exchange rates greater than $.02/rupee than at the equilibrium exchange rate.
• B)The rupee is overvalued at exchange rates less than $.02/rupee.
• C)To achieve an exchange rate greater than $.02/rupee,the Reserve Bank of India must buy surplus dollars with rupees.
• D)Indian exports to the United States are more expensive at exchange rates greater than $.02/rupee than at the equilibrium exchange rate.

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Definitions:

Stagflation

A situation in an economy where the inflation rate is high, economic growth rate slows, and unemployment remains steadily high.

Oil Prices

The cost per barrel of crude oil as determined by global supply and demand factors.

General Theory

A broad and fundamental principle or set of principles intended to explain a major phenomenon or field of study.

Full Employment

The level of employment where all who are willing and able to work at current wage rates are employed; often considered an indication of an economy's health.