In a World with Two Products, Wheat (W)and Coffee (C)

question 50

Multiple Choice

In a world with two products, wheat (W) and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C, and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation

• A)Alpha will prevail if world demand for coffee is great relative to its supply.
• B)Alpha will prevail if world demand for wheat is weak relative to its supply.
• C)Beta will prevail if world demand for coffee is great relative to its supply.
• D)Beta will prevail if world demand for wheat is great relative to its supply.

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