Foreign Merchants Often Conduct Transactions in U

question 11

Multiple Choice

Foreign merchants often conduct transactions in U.S. dollars because

• A) the dollar is a generally acceptable medium of exchange in international transactions.
• B) they don't have enough money of their own.
• C) interest rates on the dollar are higher than on their currency.
• D) inflation is higher in the United States.

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Definitions:

Inputs

In economics, inputs are the resources used in the production of goods and services, such as labor, materials, and capital.

Trade-off

A situation where making a decision to gain one thing requires sacrificing another.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen over others.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to do one thing instead of another.