Use the following graph, which shows the supply and demand curves for dollars in the pound/dollar market, to answer the next question,
Assume that D1 and S1 are the initial demand for and supply of dollars. Suppose that Britain's demand for dollars increases from D1 to D2. If the British government wishes to fix the exchange rate at the initial level, it should ________.
A. buy and add more to its dollar reserves
B. encourage the British to import more U.S. products
C. sell pounds in exchange for U.S. dollars
D. sell some of its dollar reserves
Answer: D
You might also like to view...
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building he owns and currently rents for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What is the minimum revenue he must earn per year in order for it to be worth his while to open
his sushi bar? a. $26,000 b. $66,000 c. $78,000 d. $52,000 e. $72,000
Use the following information to answer the next question.C = A + .75(Y - T)A = $900I = $600G = $400T = $400NX = -$200Suppose the equilibrium level of real GDP is represents full employment. What would be the effect of a tax decrease of $100?
A. There will be an inflationary expenditure gap of $75. B. There will be an inflationary expenditure gap of $100. C. There will be a recessionary expenditure gap of $75. D. There will be a recessionary expenditure gap of $100.
Markets tend to overproduce goods that generate external costs.
Answer the following statement true (T) or false (F)
One feature of pure monopoly is that the monopolist is:
A. one of several producers of a product. B. a price maker. C. a price taker. D. a producer of products with close substitutes.