When the Equilibrium Dollar Price of a Foreign Currency Decreases

question 80

Multiple Choice

When the equilibrium dollar price of a foreign currency decreases due to changes in demand for or supply of the foreign currency,the foreign currency

• A) has appreciated.
• B) has depreciated.
• C) is overvalued.
• D) is undervalued.
• E) is devalued.

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Definitions:

Substitutes

Goods or services that can replace each other in use or consumption, such that an increase in the price of one leads to an increase in demand for the other.

Marginal Revenue

Marginal revenue is the additional revenue that a firm gains from selling one more unit of a good or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Price

The cost in money to purchase a particular good or service.