Which of These Is NOT a Determinant of Exchange Rates

question 173

Multiple Choice

Which of these is NOT a determinant of exchange rates?

• A) foreign tastes and preferences for U.S. goods and services
• B) foreign confidence in U.S financial markets
• C) foreign demand for U.S. gold
• D) foreign expectations of future exchange rates

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Definitions:

U-Shaped Marginal Cost

A graphical representation of the cost incurred to produce one more unit of a good, which decreases at first due to increasing returns but eventually increases due to decreasing returns.

Profit-Maximizing Output

The quantity of output at which a firm achieves the maximum possible profit, determined where marginal revenue equals marginal cost.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs.

Perfectly Competitive Firm

A company that operates in a market where there are many buyers and sellers, no barriers to entry or exit, and the firm sells a homogeneous product.