If the U.S. interest rate, adjusted for people's expectation of inflation, increases sharply relative to the rest of the world, then
A) there will be a decrease in the demand for dollars in foreign exchange markets.
B) there will be no change in the demand for dollars in foreign exchange markets but there will be an increase in demand for foreign currency.
C) the dollar will appreciate.
D) the dollar will depreciate.
Answer: C
You might also like to view...
If this is a closed economy, what will the price of a bike be?
A. $40 B. $100 C. $20 D. $140
In the traditional Keynesian model, an increase in current taxes
A) increases disposable income but does not affect consumption. B) decreases both disposable income and consumption. C) decreases disposable income but increases consumption. D) has no effect on either disposable income or consumption.
Government expenditures as a share of the U.S. economy are:
a. the largest in the world. b. the smallest in the world. c. smaller than most Western European countries. d. larger than Canada, France, and the United Kingdom but slightly smaller than Germany and Italy.
Which of the following is not a function of money?
a. Standard of deferred payment. b. Medium of exchange. c. Legal tender. d. Store of value. e. All of the above are functions of money.