When the Exchange Rate Is Determined by Market Forces and an Economy

question 69

Multiple Choice

When the exchange rate is determined by market forces and an economy is experiencing a net inflow of capital, the economy will tend to

• A) run a budget deficit.
• B) run a trade deficit.
• C) experience an increase in the supply of money.
• D) experience a reduction in the supply of money.

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Definitions:

Compound Eye

A type of eye found in some arthropods, consisting of multiple small visual units that provide a wide field of vision and the ability to detect movement.

Camera Eye

A type of eye found in vertebrates and some mollusks that is characterized by a spherical lens that focuses light on the retina, producing a detailed image.

Ocelli Eye

Simple eyes, or ocelli, are found in some invertebrates, consisting of photoreceptor cells to detect light intensity and direction, but not form detailed images.

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant stimuli over time.