Which of the Following Is Most Likely to Cause the Dollar

question 23

Multiple Choice

Which of the following is most likely to cause the dollar to depreciate?

• A) higher domestic interest rates
• B) an increase in the rate of inflation abroad
• C) a shift by the Fed to a more expansionary monetary policy
• D) a decrease in foreign interest rates

Identify the relationship between opportunity costs and comparative advantage.

Distinguish between absolute and comparative advantage.

Recognize how specialization based on comparative advantage benefits trading partners.

Determine which parties have a comparative or absolute advantage based on opportunity costs.

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Definitions:

Perfectly Competitive

A market structure characterized by a complete absence of rivalry among the sellers and it implies an industry or market in which many sellers offer identical products.

Benchmark Pricing

A method of pricing where a standard or reference price is used to set or compare the price of goods and services.

Similar Products

Goods that serve comparable purposes or needs and can be considered substitutes for each other by consumers.

Short Run

A period in economics during which at least one factor of production is fixed, limiting the ability of the economy or firm to adjust.