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

question 301

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.

---

Definitions:

Government Expenditures

The total amount spent by the government, including spending on goods, services, and public works, and transfer payments.

GDP Components

The parts that make up Gross Domestic Product, generally categorized as consumption, investment, government spending, and net exports.

GDP

Gross Domestic Product, the total monetary value of all final goods and services produced within a country's borders in a specific time period.

American Tourists

Individuals from the United States who travel to different countries or destinations for pleasure, leisure, or cultural experiences.