Refer to Figure 18-1. Currency speculators believe that the value of the euro will decrease relative to the dollar. Assuming all else remains constant, how would this be represented?
A) Supply would increase, demand would decrease and the economy moves from C to B to A.
B) Supply would decrease, demand would decrease and the economy moves from B to C to D.
C) Supply would increase, demand would increase and the economy moves from D to A to B.
D) Supply would decrease, demand would increase and the economy moves from A to D to C.
D
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The lower the nominal interest rate, the
A) greater the quantity of money supplied. B) greater the demand for money. C) smaller the demand for goods and services. D) smaller the quantity of money demanded. E) greater the quantity of money demanded.
A free-trade area is:
a. a group of countries that agrees there will be "no rules" about trade—anything goes. b. a group of countries that agrees to eliminate customs fees and containerized shipping charges on goods traded among them. c. a group of countries that agrees to eliminate barriers to trade between themselves while keeping tariffs in place against the rest of the world. d. a group of countries that eliminates trade barriers among themselves and erects a common tariff against all other nations
Whenever U.S. government spending increases, thereby increasing the demand for real balances and the rate of interest, the currency will appreciate and there is a potential for:
A) overshooting. B) crowding out. C) a Republican backlash. D) recession.
Which of the following is true of an economic union?
A. Free movement of resources, but restricted movement of goods among the member countries B. Free movement of goods, but restricted movement of resources across the member countries C. Harmonization of all economic policies in the member countries D. The members have a common set of tariffs among themselves but the external tariff rates are determined independently.