If the Equilibrium Exchange Rate Between U

question 53

Multiple Choice

If the equilibrium exchange rate between U.S.dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen,then a __________ exists.

• A) shortage of dollars
• B) surplus of dollars
• C) surplus of yen
• D) shortage of yen
• E) b and d

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Definitions:

Money Supply

The whole sum of economic financial assets at a specified time.

Money Supply Growth Rate

The rate at which the total amount of monetary assets available in an economy increases over a specific period.

Long-run Phillips Curve

A concept in economics indicating that in the long run, there's no trade-off between inflation and unemployment, showing a vertical line at the natural rate of unemployment.

Unemployment

Unemployment refers to the situation when individuals who are capable of working and are actively seeking work are unable to find employment.