Suppose the price of one euro is fixed at $1.00. A Dutch oil company discovers new oil reserves in the North Sea and offers the oil for sale. If a flexible system is allowed, then what is the impact on the foreign exchange rate?

a. A dollar becomes worth one euro.
b. The euro depreciates relative to the dollar.
c. A dollar becomes worth two euros.
d. The euro appreciates relative to the dollar.


d. The euro appreciates relative to the dollar.

Economics

You might also like to view...

Price elasticity of demand along a linear, downward-sloping demand curve increases as price falls

a. True b. False Indicate whether the statement is true or false

Economics

The optimal number of workers to be hired by a firm operating in a competitive labor market is where:

a. P = MRP. b. MRP = w. c. P = w. d. MP = MRP.

Economics

One reason that diseconomies of scale arise is because:

A. of the difficulties involved in managing and coordinating a large business enterprise. B. firms must be large both absolutely and relative to the market to employ the most efficient productive techniques available. C. beyond some point marginal product declines as additional units of a variable resource (labor) are added to a fixed resource (capital). D. the short-run average total cost curve rises when marginal product is increasing.

Economics

If the U.S. government's borrowing needs increase, all other factors constant the:

A. supply of bonds will increase. B. supply of bonds and the demand for bonds will both increase. C. demand for bonds will decrease. D. price of bonds will increase.

Economics