If Two Countries, a and B, Have Separate Currencies and There

question 7

Multiple Choice

If two countries, A and B, have separate currencies and there is a shift in consumer preferences away from the goods of country A and towards those of country B, then

• A) there will be an increase in inflation in country A.
• B) the foreign exchange value of country A's currency is likely to rise, thus making country A's goods relatively more expensive and worsening the reduction in aggregate demand in country A.
• C) the foreign exchange value of country A's currency is likely to fall, thus making country A's goods relatively cheaper and offsetting the reduction in aggregate demand in country A.
• D) there will be a fall in aggregate demand in country B.

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Definitions:

Interpersonal Trust

The belief in the reliability, truth, ability, or strength of others within personal or professional relationships.

Minimal Goal Level

The lowest standard or objective that an individual aims to achieve within a specific timeframe or context.

Social Learning Theory

A theory of learning and social behavior which suggests that new behaviors can be acquired by observing and imitating others.

Expectancy

The belief or anticipation that a specific event or outcome will occur, often used in the context of motivation and behavior.