The market in which the currency of one country is traded for the currency of another country is called
A. the futures market.
B. the commodities market.
C. the foreign exchange market.
D. the international trade market.
C. the foreign exchange market.
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Which of the following statements is correct about a market in which pollution is emitted?
a. Both corrective taxes and pollution permits internalize the externality of pollution. b. Corrective taxes internalize the externality of pollution, but pollution permits do not internalize that externality. c. Corrective taxes fail to internalize the externality of pollution, but corrective taxes internalize that externality. d. Neither corrective taxes nor pollution permits internalize the externality of pollution.
Which of the following is not correct?
a. The higher average return on stocks than on bonds comes at the price of higher risk. b. Risk-averse persons will take the risks involved in holding stocks if the average return is high enough to compensate for the risk. c. Insurance markets reduce risk, but not by diversification. d. Risk can be reduced by placing a large number of small bets, rather than a small number of large bets.
Suppose the price of banana rises over time and consumers respond by buying fewer bananas. This situation contributes to which bias in the consumer price index?
A. substitution bias B. transportation bias C. quality bias D. indexing bias
Assume a country produces two types of goods: manufactured goods and agricultural goods. When this country experiences economic growth, we know that
A. there will be movement along the curve toward more agricultural goods. B. the production possibilities curve will shift outward. C. the production possibilities curve will shift inward. D. there will be a movement along the curve toward more manufactured goods.