Suppose there are two countries (country A and country B) each with its own currency (Currency A and Currency B). Suppose the exchange rate is expressed in terms of amount of Currency A needed to get Currency B. A weakening of Currency A would show up as
A. an increase in the interest rate.
B. a decrease in the exchange rate.
C. a decrease in the interest rate.
D. an increase in the exchange rate.
Answer: D
You might also like to view...
Which of the following statements is true?
A) Job search refers to the activities that workers undertake to find appropriate jobs. B) It is easier to find full-time suitable employment than to find seasonal part-time employment. C) In a competitive market, workers who demand a wage higher than the equilibrium wage rate are likely to get employed faster. D) Job search is normally a month-long process.
Which of the following statements is true of the scientific method?
A) The scientific method may not reveal a "true" model of the world. B) The scientific method does not require the models to be tested with data. C) The scientific method used by economists and scientists is independent of empiricism. D) The scientific method can help develop accurate models even when data are unavailable.
What is an advantage of using options instead of forward contracts when speculating on exchange rates?
What will be an ideal response?
In a competitive market with identical firms,
a. an increase in demand in the short run will result in a new price above the minimum of average total cost, allowing firms to earn a positive economic profit in both the short run and the long run. b. firms cannot earn positive economic profit in either the short run or long run. c. firms can earn positive economic profit in the long run if the long-run market supply curve is upward sloping. d. free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.