What are the major types of transactions or activities that result in an increase in the demand for foreign currency (in exchange for U.S. dollars) in the spot foreign exchange market?
What will be an ideal response?
POSSIBLE RESPONSE: The demand for foreign exchange will increase if U.S. consumers increase their demand for the goods and services of other countries or if the U.S. increases its willingness to lend to foreign borrowers or its desire to invest in foreign financial assets. To purchase foreign goods and services, U.S. consumers must first convert the dollar into units of the foreign currency. Shifts in demand away from U.S. products and toward foreign products, that are the result of forces other than changes in the exchange rate, would result in U.S. consumers exchanging more dollars to buy more foreign currency.
The demand for foreign currency will also increase with an increase in the willingness of the U.S. to lend money to foreign borrowers or invest in foreign currency-denominated financial assets. Converting dollars into foreign currency would increase the demand for foreign currency.
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During 2012, a country has consumption expenditures of $3.0 trillion, investment expenditures of $1.5 trillion, government expenditure of $1.5 trillion, exports of $1.0 trillion, and imports of $1.5 trillion
Aggregate expenditure for the country is A) $5.5 trillion. B) $6.5 trillion. C) $6.0 trillion. D) $8.5 trillion. E) $7.0 trillion.
In a command economy, the ultimate decision about what to produce is left to
A) buyers. B) the government. C) sellers. D) households.
What types of international transactions are recorded in the balance of payment accounts?
What will be an ideal response?
The value of output was $100 billion in Northland and $200 billion in Southland. The population of Northland was 50 million and the population of Southland was 30 million. There were 30 million employed workers in Northland and 20 million employed workers in Southland.
A. Northland; the same in both countries B. Northland; higher in Northland C. Southland; higher in Southland D. Southland; the same in both countries