Suppose That Country I Is Importing Good Y and Exporting

question 10

Multiple Choice

Suppose that country I is importing good Y and exporting good X. At a terms of trade of 1X:3Y, country I is willing to import 90 units of Y and to export 30 units of X in exchange; at a terms of trade of 1X:4Y, country I is willing to import 128 units of Y and to export 32 units of X in exchange. Considering just these two offer curve points, country I's demand for imports over the range between these two points is __________.

• A) inelastic
• B) unit elastic
• C) elastic
• D) inelastic, unit elastic, or elastic - cannot be determined without more
• Information

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Definitions:

Currency

A system of money in general use in a particular country or economic context, facilitating the transfer of goods and services.

London Interbank Offer Rate

An interest rate average calculated from estimates submitted by leading banks in London that indicates the rate at which banks lend to one another.

Eurodollar Loans

Financial loans that are denominated in U.S. dollars but are held in banks outside the United States.

Overnight

In financial terms, this refers to transactions that are settled or occur from one business day to the next.