How Will the Exchange Rate (Foreign Currency Per Dollar)respond to an Increase

question 106

Multiple Choice

How will the exchange rate (foreign currency per dollar) respond to an increase in preference for imported goods in the United States in the long run?

• A)Exchange rates will rise.
• B)Exchange rates will fall.
• C)Exchange rates will be unaffected by changes in the relative rate of productivity growth in the United States,both in the short run and in the long run.
• D)The exchange rate will be affected in the short run,but not in the long run.

---

Definitions:

Unrealized Increase/Decrease

Unrealized increase/decrease refers to the changes in the value of investments that have not yet been sold and the gains or losses have not been 'realized' through a transaction.

Fiscal Year

A one-year period chosen by a business or government for accounting purposes, which may or may not align with the calendar year.

Unrealized Increase/Decrease

Change in the market value of assets that have not been sold, impacting a company's financial statements in terms of valuation but not cash flow.

Market Value

The existing value at which an asset or service might be traded in a commercial environment.