If the required reserve ratio is a uniform 25 percent on all deposits, the money multiplier will be: a. 4.00. b. 2.50. c. 0.25.
1 answer:
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Answer:
a. Import more bushels of wheat from Mexico
Explanation:
When the real exchange rate is higher than one, a country is likely to import more, since goods are cheaper in the other country than locally. In this example, a bushel of wheat, in the US, costs $6.40, while in Mexico, the same product costs:
Therefore, the US will Import more bushels of wheat from Mexico.