Suppose That Great Britain Is a Major Export Market for Your

question 78

Multiple Choice

Suppose that Great Britain is a major export market for your firm, a U.S.-based MNC. If the British pound depreciates against the U.S. dollar,

• A)your firm will be able to charge more in dollar terms while keeping pound prices stable.
• B)your firm may be priced out of the U.K. market, to the extent that your dollar costs stay constant and your pound prices will rise.
• C)to protect U.K. market share, your firm may have to cut the dollar price of your goods to keep the pound price the same.
• D)both b and c are correct

Understand the concept of maintaining a minimum cash balance and its impact on financing decisions.

Understand the differences between Keynesian and classical economic theories.

Recognize the concept of equilibrium GDP and its relation to full employment according to Keynes and the classicals.

Identify Say's Law and its significance in classical economics.

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