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Concerning Foreign Exchange Trading, the Bid Rate Refers to the Price

question 19

True/False

Concerning foreign exchange trading, the bid rate refers to the price that a bank is willing to pay for a unit of foreign currency; the offer rate is the price at which the bank is willing to sell a unit of foreign currency.


Definitions:

Consumer Surplus

The difference between the maximum price consumers are willing to pay and the actual price they pay.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable due to market distortions like taxes or subsidies.

Producer Surplus

The difference between the amount producers are willing to sell a good for and the actual amount they receive.

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices.

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