1. By using demand and supply curves for the Japanese yen based on the $/¥ price for yen, a raise in US INFLATION RATES would:
a) Reduce the demand for yen and decrease the supply of the yen.
b) Raise the demand for yen and decrease the supply of the yen.
c) Raise the demand and increase the supply of yen.
d) Reduce both the supply and the demand of yen.
e) Have no impact on the demand or supply of the yen.
2. The increase in the exchange rate of the U.S. dollar relative to the trading partner can result from:
a) higher anticipated costs of production in the U.S.
b) higher interest rates and higher inflation in the U.S.
c) higher growth rates in the trading partner's economy
d) a change in the terms of trade
e) lower export industry productivity
3. The purchasing power parity hypothesis implies that a raise in inflation in one country relative to the other will over a long period of time:
a) increase exports
b) decrease the competitive pressure on prices
c) lower the value of the currency in the country with higher inflation rate
d) raise foreign aid
e) raise the speculative demand for the currency
4. The isoquants for inputs which are perfect substitutes for one another comprises of a series of:
a) right angles
b) parallel lines
c) concentric circles
d) right triangles
5. Marginal factor cost is stated as the amount which an additional unit of the variable input adds to ____.
a) marginal cost
b) variable cost
c) marginal rate of technical substitution
d) total cost