When the People Involved in an Exchange Are from Countries

question 25

Multiple Choice

When the people involved in an exchange are from countries that use different currencies, an intermediate asset transaction has to take place:

• A)the seller must convert her currency into the currency that the buyer uses and accepts.
• B)the buyer must convert her currency into the currency that the seller uses and accepts.
• C)the buyer and seller should engage in barter trade.
• D)both buyer and seller should exchange their currencies to gold.

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Definitions:

Inferior Goods

Goods for which demand decreases as the income of consumers increases, opposite to normal goods.

Quantity Demanded

Refers to the total amount of a good or service that consumers are willing and able to purchase at a given price level in a given period.

Demand

In economics, it represents consumers' desire to purchase goods and services at certain prices.

Diet Pepsi

A low-calorie carbonated soft drink produced by PepsiCo, serving as an alternative to Pepsi with fewer calories.