Under a System of Floating Exchange Rates, Relatively High Productivity

question 75

Multiple Choice

Under a system of floating exchange rates, relatively high productivity and low inflation rates in the United States result in

• A) an increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in the dollar.
• B) an increase in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar.
• C) a decrease in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in the dollar.
• D) a decrease in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar.

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Definitions:

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales.

Variable Costs

Costs that vary directly with the level of production or output.

Fixed Costs

Expenses that do not change with the level of goods or services produced over a short period.

Space Rental

The act of obtaining the use of a physical location or property for a specified period of time in exchange for payment.