Assume Exchange Rates Are Flexible

question 74

Multiple Choice

Assume exchange rates are flexible.The existence of inflation in a country that is higher than inflation in the rest of the world will tend to

• A)increase the demand for that country's currency in the foreign-exchange market,and lead to an appreciation of that currency.
• B)increase the supply of that country's currency in the foreign-exchange market,and lead to a depreciation of that currency.
• C)increase its exports.
• D)decrease its imports.
• E)have no effect on the foreign-exchange market.

---

Definitions:

Receptor Sites

Specific regions on the surface of a cell or within a cell where molecules such as hormones, drugs, or neurotransmitters, can bind to elicit a physiological response.

Endocrine Glands

Glands of the endocrine system that release hormones directly into the bloodstream to regulate various body functions.

Hormones

Chemical messengers that are secreted by glands in the endocrine system and travel through the bloodstream to target organs.

Dangerous Situation

A scenario in which there is a high risk of harm or injury to individuals or property.