Hedging risk for a short position is accomplished by
A) taking a long position.
B) taking another short position.
C) taking additional long and short positions in equal amounts.
D) taking a neutral position.
A
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The equilibrium exchange rate is 0.70 euros per dollar. At this exchange rate, the quantity demanded equals the quantity supplied and is $1.3 trillion a day. If the exchange rate is now 0.80 euros per dollar, then
A) there is a shortage of dollars and the exchange rate falls. B) there is no change. C) there is a surplus of dollars and the exchange rate falls. D) there is a surplus of dollars and the exchange rate rises. E) there is a shortage of dollars and the exchange rate rises.
The cyclical deficit is the portion of the deficit
A) that would exist if the economy were at full employment. B) that does not add to the national debt. C) that is the result of nondiscretionary federal spending. D) created by fluctuations in real GDP. E) that is the result of discretionary federal spending.
In economics, the total amount received for selling a good or service is referred to as
A) revenue. B) factor payments. C) profit. D) capital gains.
One of the advantages of floating exchange rates is that:
a. consumers always know how much imported goods cost. b. businesses always know, in advance, what future exchange rates will be. c. countries are free to pursue their own macroeconomic policies without maintaining exchange rates. d. countries cannot act independently and must thus coordinate their macroeconomic policies. e. the global interest rate tends to decline to the lowest possible level.