If the U.S. purchases oil from Nigeria, what is the effect in the foreign exchange market?
a. It will increase demand for U.S. dollars.
b. It will decrease demand for U.S. dollars.
c. It will increase supply of U.S. dollars.
d. It will decrease supply of U.S. dollars.
C
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Suppose you place $10,000 in a retirement fund that earns a nominal interest rate of 8 percent. If you expect inflation to be 5 percent or lower, then you are expecting to earn a real interest rate of at least:
a. 1.6 percent. b. 4 percent. c. 5 percent. d. 3 percent.
The usual situation in banking regarding asymmetric information is:
A. borrowers and lenders have the same information. B. lenders and borrowers have perfect information. C. borrowers know more than lenders. D. lenders know more than borrowers.
Consumption spending includes spending on:
A. stocks, bonds, and other financial instruments. B. capital goods, residential housing, and changes in inventories. C. goods and services by federal, state, and local governments. D. durables, nondurables, and services.
The idea that people will substitute cheaper commodities for more expensive commodities is called
A) the marginal effect. B) the real-income effect. C) the substitution effect. D) the utility effect.