If Coffee and Cream Are Complements, an Increase in the Price

question 62

Multiple Choice

If coffee and cream are complements, an increase in the price of coffee will cause

• A) the demand for cream to increase.
• B) the demand for cream to fall.
• C) the demand for coffee to fall.
• D) no change in the demand for cream; only quantity demanded would be affected.

---

Definitions:

Forward Exchange Rate

The agreed-upon exchange rate for a currency to be exchanged on a future date.

Spot Exchange Rate

The current exchange rate at which one currency can be exchanged for another for immediate delivery.

Currency Exchange Risks

Currency exchange risks involve the potential for losses due to fluctuations in the exchange rate between two currencies when conducting international transactions.

EUR

The primary currency for the Eurozone, adopted by 19 of the European Union's 27 nations.