In June 2008, $1 Bought 0

question 272

Multiple Choice

In June 2008, $1 bought 0.5 pounds and in October, $1 bought 0.65 pounds. As a result of this change, between June and October.

• A) the demand for dollars increased.
• B) the dollar depreciated and the quantity of dollars demanded decreased.
• C) the demand for dollars decreased.
• D) the dollar appreciated and the quantity of dollars demanded decreased.

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Definitions:

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than its competitors.

Absolute Advantage

The ability of an entity to produce more of a good or service than competitors using the same amount of resources.

Comparative Advantage

The ability of an entity to produce a good or offer a service at a lower opportunity cost than other entities, leading to more efficient trade possibilities.

Production

Production refers to the process of combining various material inputs and immaterial inputs (plans, knowledge) to make something for consumption (output).