1. Country A can produce one Outfit in 10 hours and one unit of Corn in 2 hours.Country B can produce one Outfit in 15 hours and one unit of Corn in 3 hours.Which of the following statements is true?

Group of answer choices

Country B has a comparative advantage in Outfits.

Country A has a comparative advantage in Outfits.

Country A has a comparative advantage in Corn.

Country B has a comparative advantage in the production of both Corn and Outfits.

Neither country has a comparative advantage because production trade offs are identical.

2.Think of the U.S. as the domestic country and Great Britain (GB) as the foreign country.Let "e" stand for the domestic price of one unit of the foreign currency.Ife= 1.80, then

Group of answer choices

none of the other options.

$1 would cost approximately 1.80.

a guitar in GB listed at 1,800 would cost $1,000.

a guitar in the US listed at $2,160 would cost 1,800.

$1 would cost approximately 0.56.

3.Think of the U.S. as the domestic country and Great Britain (GB) as the foreign country.Let "e" stand for the domestic price of one unit of the foreign currency.Ifedecreases from 1.75 to 1.7, then

U.S. buyers would find that goods purchased from GB would now be more expensive, ceteris paribus.

we had a depreciation of the dollar against the .

GB buyers would find that goods purchased from the U.S. would now cost more, ceteris paribus.

then e' (i.e., the price of one U.S. $ in terms of ) would also decrease.

none of the other options.

4.Suppose Thailand has seen a downturn in their economy, and US investors (and other countries) start pulling out their investments from Thailand's financial markets. Suppose this cause a decrease in the dollar price of the Thai currency (theBaht). This could be called a 'depreciation of theBahtagainst the dollar. Then, an analyst says that "...because the price of the Baht has fallen, this will cause people to buy more of theBaht, and that will cause the price of theBahtto increase again back toward where it was before the economic downturn." (It may help you to use our model of exchange rate determination, and substitute theBaht() in place of the Pound (). Let 'e' be the $ price of1 - currently about $0.03!) .

incorrect because it will increase above where it was before the economic downturn.

correct because there would be a shortage of the Baht in the currency market if this did not happen.

correct because people buying more always causes price to increase.

correct because there would be a surplus of the Baht in the currency market if this did not happen.

incorrect because buyers of the Baht caused the price drop in the first place, and the drop in price will not shift demand for the Baht to the right.

5.Consider our simple Supply and Demand model of exchange rate determination. Think of the U.S. as the domestic country and Great Britain (GB) as the foreign country.Let "e" stand for the domestic price of one unit of the foreign currency (i.e., the $ price of 1.If we had an exogenous increase in the number of GB imports that US consumers wish to buy, we would expect

Group of answer choices

a decrease (i.e., leftward shift) in the demand for and an increase in e.

a (i.e., leftward shift) decrease in the supply of and an increase in e.

an increase (i.e., rightward shift) in the supply of and an increase in e.

an increase (i.e., rightward shift) in the demand for and an increase in e.

an (i.e., rightward shift) increase in the supply of and a decrease in e.

6.Think of the U.S. as the domestic country and Great Britain (GB) as the foreign country.Let "e" stand for the domestic price of one unit of the foreign currency.Ifeincreases from 1.6 to 1.65, then

Group of answer choices

GB buyers would find that goods purchased from the U.S. would now cost more, ceteris paribus.

we had an appreciation of the dollar against the .

none of the other options.

then e' (i.e., the price of one U.S. $ in terms of ) would also increase.

U.S. buyers would find that goods purchased from GB would now be more expensive, ceteris paribus.