Which of the following statements about the foreign exchange market is correct?
A) The higher the expected future exchange rate, the smaller is the expected profit from holding dollars and so the smaller is the demand for dollars.
B) The higher the expected future exchange rate, the greater is the expected profit from holding dollars and so the greater is the demand for dollars.
C) The higher the expected future exchange rate, the smaller is the expected profit from holding dollars and so the greater is the demand for dollars.
D) The lower the expected future exchange rate, the smaller is the expected profit from holding dollars and so the greater is the demand for dollars.
E) The lower the expected future exchange rate, the greater is the expected profit from holding dollars and so the greater is the demand for dollars.
B
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If the good in the above figure is a normal good and income rises, then the new equilibrium quantity
A) is less than 300 units. B) is 300 units. C) is more than 300 units. D) could be less than, equal to, or more than 300 units.
The absorption approach is a theory of the balance of payments that emphasizes how domestic spending on domestic goods changes relative to domestic output
Indicate whether the statement is true or false
Figure 2-6
A shift in the production possibilities frontier from DC to EC in could be due to a
a.
technological improvement in the production of ice cream
b.
reduction in the rate of unemployment
c.
rise in the rate of unemployment
d.
technological improvement in the production of frozen yogurt
e.
fall in the demand for frozen yogurt
Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college. Do you agree? Explain.
What will be an ideal response?