Due to the integrated nature of their capital markets, investors in both the U. S. and U. K. require the same real interest rate, 2.5%, on their lending. There is a consensus in the capital markets that the annual inflation rate is likely to be 3.5% in the U. S. and 1.5% in the U. K. in each of the next three years. The spot exchange rate is currently $1.50/£. Using the International Fisher Effect, what is your expected future spot dollar-pound exchange rate in three years from now?
a. $1.6154/₤
b. $1.5904/₤
c. $1.5597/₤
d. $1.5785/₤

answer; ///blank(1) longer; blank(2); lessi believe this is correct, plz check first; good luck';

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answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.