Figure 4-19 -Refer to Figure 4-19.If There Is Currently a Shortage of a Shortage

question 94

Multiple Choice

Figure 4-19
-Refer to Figure 4-19.If there is currently a shortage of 20 units of the good,then the law of

• A)demand predicts that the price will rise by $2 to eliminate the shortage.
• B)supply predicts that the price will rise by $2 to eliminate the shortage.
• C)supply and demand predicts that the price will rise by $2 to eliminate the shortage.
• D)supply and demand predicts that the price will fall by $2 to eliminate the shortage.

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Definitions:

Indirect Quote

A foreign exchange rate quotation that specifies the foreign currency amount that can be purchased with one unit of the domestic currency.

Country B's Currency

The legal tender or monetary system used in a hypothetical Country B, which can be exchanged for goods and services or traded for other currencies.

Country A's Currency

The legal tender issued by Country A's central bank or monetary authority, used as a medium of exchange within Country A.

Forward Rate

An agreed-upon price for a financial transaction that will occur at a future date.