With Everything Else the Same, in the Foreign Exchange Market

question 344

Multiple Choice

With everything else the same, in the foreign exchange market which of the following increases the supply of U.S. dollars?
I. a fall in the U.S. interest rate
II. a fall in interest rates in foreign countries
III. a rise in expected future exchange rate

• A) I and III only
• B) I and II only
• C) I only
• D) I, II, and III

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Definitions:

Parity Ratio

The ratio of the price received by farmers from the sale of an agricultural commodity to the prices of other goods paid by them; usually expressed as a percentage; used as a rationale for price supports.

Price Supports

Government interventions in the market to maintain the price of a commodity at a certain level.

Farm Products

Products that are the result of agriculture and livestock cultivation, such as fruits, vegetables, grains, and meat.

Farm Employment

Jobs and labor associated with working on farms, including planting, cultivation, and harvesting of crops, as well as raising livestock.