Which of the following is likely to decrease the supply of U.S. dollars in the forex market?
A. If investors' confidence in foreign economies increases
B. If U.S. consumers prefer foreign goods to U.S. goods
C. If foreign interest rates are low relative to U.S. interest rates
D. All of these will increase the supply of U.S. dollars.
Answer: C
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Suppose the government has a $900 billion budget deficit. If the government borrows $560 billion to finance this deficit and finances the rest by printing money, the amount of new money created will be
A) $340 billion. B) $560 billion. C) $900 billion. D) $1,460 billion.
Efficiency in risk bearing implies that
A) risk is completely eliminated. B) the least risk-averse party bears most of the risk. C) the most risk-averse party bears most of the risk. D) all of the risk is borne by just one of the parties regardless of the degree of risk aversion.
Which of these tools in an example of monetary policy?
a. reducing income taxes b. changing reserve requirements c. increase government spending d. borrowing money through deficit spending
Public choice theory focuses on the economics of
What will be an ideal response?