Under a system of floating exchange rates, a shortage in a currency will lead to a(n)
A. long-term surplus of that currency.
B. long-term shortage of that currency.
C. depreciation of that currency.
D. appreciation of that currency.
Answer: D
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When the Fed purchases government securities, it
a. increases banks' reserves and makes possible an increase in the money supply b. decreases banks' reserves and makes possible a decrease in the money supply c. automatically raises the discount rate d. uses discounting operations to influence margin requirements e. sends a signal to the banking community that there is too much inflation
Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included
a. in both German GDP and U.S. GDP. b. in German GDP, but is not included in U.S. GDP. c. in U.S. GDP, but is not included in German GDP. d. in neither German GDP nor U.S. GDP.
When economists say the quantity demanded of a product has decreased, they mean the
a. demand curve has shifted to the left. b. demand curve has shifted to the right. c. price of the product has fallen, and consequently, consumers are buying more of it. d. price of the product has risen, and consequently, consumers are buying less of it.
Explain why a firm's shut-down decision does not incorporate the fixed costs of the production facility.
What will be an ideal response?