An Increase in the U

question 94

Multiple Choice

An increase in the U.S. demand for foreign exchange will cause

• A) an increase in the price of foreign exchange, which is a depreciation of the U.S. dollar, making foreign goods cheaper to U.S. residents.
• B) an increase in the price of foreign exchange, which is a depreciation of the U.S. dollar, making foreign goods more expensive to U.S. residents.
• C) a decrease in the price of the U.S. dollar, which is an appreciation of the U.S. dollar.
• D) an increase in the price of foreign exchange, which is an appreciation of the U.S. dollar.
• E) a decrease in the price of foreign exchange, which is an appreciation of the U.S. dollar.

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Definitions:

Corrective Tax

A tax designed to incentivize economic activities that are more socially desirable or to correct market imperfections.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of that good that consumers are willing to purchase, usually sloping downward.

Pollution

The introduction of contaminants into the natural environment that cause adverse change.

Command-And-Control

Regulatory strategies where the government sets specific limits or commands for compliance, often used in environmental policy to limit pollution.