There Is Demand for and Supply of Dollars and a Demand

question 65

Multiple Choice

There is demand for and supply of dollars and a demand for and supply of pesos.Under a flexible exchange rate system,if income growth in the United States is greater than income growth in Mexico,then

• A) the demand for dollars will shift to the right and the demand for pesos will shift to the left.
• B) the demand for pesos will shift to the right and the supply of dollars will shift to the left.
• C) the demand for pesos will shift to the left and the supply of pesos will shift to the right.
• D) the supply of pesos will shift to the right and the supply of dollars will shift to the right.
• E) none of the above

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Definitions:

Built-In Stabilizers

Automatic fiscal mechanisms, such as progressive taxation and welfare payments, that help to moderate the fluctuations of an economy's output without additional legislative action.

Income Tax Collections

The process of collecting taxes imposed on individuals or entities based on their income or profits by the government.

National Income

A measure of the total value of all goods and services produced by a country over a specific time period, often adjusted for inflation and excluding net income from abroad.

Budget Deficit

A situation where a government's expenditures exceed its revenues, resulting in the need to borrow money to cover the shortfall.