If the Equilibrium Exchange Rate Between U

question 53

Multiple Choice

If the equilibrium exchange rate between U.S.dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen,then a __________ exists.

• A) shortage of dollars
• B) surplus of dollars
• C) surplus of yen
• D) shortage of yen
• E) b and d

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Definitions:

Stealing Share

A competitive strategy aimed at gaining market share from competitors by attracting their customers, rather than expanding the overall market.

Forward Selling

The practice of selling goods that are not immediately available but will be in the future.

Forward Buying

Purchasing large quantities of goods when prices are lower to use or sell over time, often to hedge against price increases.

Marginal Subcontracting Cost

The additional cost incurred for outsourcing a unit of production or service beyond the normal capacity.