Under a System of Floating Exchange Rates, Relatively Low Productivity

question 123

Multiple Choice

Under a system of floating exchange rates, relatively low productivity and high 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.

---

Definitions:

Balance Sheet

A financial statement that displays a company's assets, liabilities, and stockholders' equity as of a specific date, showing the company's financial position.

Sole Proprietorship

A business structure owned by a single individual, where the owner and the business are legally considered the same.

Drawing Account

An account used to record the amounts withdrawn by an owner from the business for personal use.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.