All else equal, if U.S. stocks are perceived to have become riskier compared to financial investments in other countries, then the market equilibrium value of the exchange rate for the U.S. dollar will:
A. fall.
B. become fixed.
C. be equal to the value chosen by the Federal Reserve.
D. rise.
Answer: A
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The law of supply reflects the negative relationship between the price of a good or service and the quantity of that good or service that sellers are willing to offer for sale
Indicate whether the statement is true or false
All else equal and given the current system of exchange rates, if the United States enters a period of exceptionally strong growth,
A) the pressure on the dollar is to revalue. B) the pressure on the dollar is to devalue. C) the pressure on the dollar is to depreciate. D) the pressure on the dollar is to appreciate. E) Both A and D.
Expansionary monetary policy:
A. lowers interest rates, increasing investment and decreasing net exports. B. raises interest rates, raising both investment and net exports. C. lowers interest rates, increasing both investment and net exports. D. raises interest rates, decreasing both investment and net exports.
The principal feature of private goods is that
A) they cannot be rented or purchased. B) consumption by one person reduces the quantity available to others. C) no one can be excluded from consumption of the product. D) externality problems associated with their production are always negative.