Considering the Euro/U

question 106

Multiple Choice

Considering the euro/U.S. dollar exchange rate, as a U.S. dollar increases in value versus the euro (holding other factors constant) :

• A) we would expect the supply curve of dollars to slope downward.
• B) foreign goods become relatively less expensive than American goods.
• C) foreign assets become relatively more expensive than American assets.
• D) American goods become relatively less expensive than foreign goods.

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Definitions:

Saving Rate

The portion of income that is not spent on consumption but rather saved or invested.

Double Taxation

The imposition of taxes on the same income, assets, or financial transaction at two different levels of government, such as corporate income being taxed both to the corporation and to the shareholders when distributed as dividends.

Economic Growth

A rise in the production of goods and services per capita over a certain time frame.

Saving Rate

The proportion of income that is not spent on consumption but is instead saved by individuals or entities.