What are the influences on the demand for U.S. dollars in the foreign exchange market?
What will be an ideal response?
The demand for U.S. dollars depends on four main factors: the exchange rate, the world demand for U.S. exports, the interest rate in the United State and other countries, and the expected future exchange rate.
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The balance owed on credit cards in the United States in 2014 was $880 billion. When consumers pay off this balance in full,
A) M1 will decrease by $880 billion. B) M1 will remain unchanged but M2 will decrease by $880 billion. C) neither M1 nor M2 will change. D) M1 will increase by $880 billion.
Hurricane Katrina destroyed oil and natural gas refining capacity in the Gulf of Mexico. This subsequently drove up natural gas, gasoline, and heating oil prices. As a result, this should
A) shift the short-run aggregate supply curve to the right. B) shift the short-run aggregate supply curve to the left. C) move the economy down along a stationary short-run aggregate supply curve. D) move the economy up along a stationary short-run aggregate supply curve.
Interest rates increased continuously during the 1970s. The most likely explanation is
A) banking failures that reduced the money supply. B) a rise in the level of income. C) the repeated bouts of recession and expansion. D) increasing expected rates of inflation.
An inferior good
a. has a negative income elasticity. b. is one where the demand curve shifts to the left when income goes up. c. exists only in theory. d. is a low-quality good. e. Both a and b are true.