Suppose the Inflation Rate in Canada Is 1 Percent and the Inflation

question 36

Multiple Choice

Suppose the inflation rate in Canada is 1 percent and the inflation rate in Mexico is 3 percent.If the nominal exchange rate in terms of Mexican pesos per Canadian dollar falls by 4 percent, by how much will the real exchange rate (in terms of Mexican goods per Canadian good) change?

• A)+6 percent
• B)+2 percent
• C)−2 percent
• D)−6 percent

Analyze how changes in consumer income affect the demand for various types of goods.

Distinguish between the concepts of income effect and substitution effect.

Understand the supply curve and its relationship with price and quantity supplied.

Identify factors that cause shifts in the supply curve.

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Definitions:

Menarche

The occurrence of the first menstrual period in females.

Cell Phone

A portable telephone that can make and receive calls over a radio frequency link while the user is moving within a telephone service area.

Primary Sex Characteristics

the main organs directly involved in reproduction, including the ovaries in females and the testes in males.

Pubic Hair

Body hair that develops on the genital area as part of human puberty.