The supply curve for British pounds in the foreign exchange market:
Answer(s): C
The supply curve for pounds is dependent on the purchases of foreign goods by British citizens. An increase in the foreign price of the pound means that a pound will purchase more foreign currency and more goods priced in terms of foreign currency. The British buy more from abroad and therefore supply more pounds to the market as the foreign price of the pound rises.
When both exports and imports are considered, the major advantage of international trade is that it allows us to
In the absence of trade the consumption of each country is constrained by the country's production possibilities.Trade expands the consumption possibilities of both countries. Specialization and exchange permits two countries to expand their joint output and as a result, both countries can increase their consumption of both all goods.
A tax levied on imported goods is called a(n)
A tariff is a tax levied on goods imported into a country.
Under a flexible exchange rate system, a nation that offers more attractive investment opportunities than its trading partners can expect to run a
Answer(s): D
Since a high yield on investments will attract capital, the nation will run a capital account surplus which must be offset by a current account deficit.
According to the method for calculating short-term interest rates from annualized rates, a three-month interest rate of 4% means that the interest rate paid after three months will be ________.
Answer(s): B
The rate to be paid over the period is equal to the annual rate multiplied by the length of the period, as a proportion of a year. Thus: 4%(3/12) = 1%.
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