Under a System of Flexible Exchange Rates, an Increase in the Supply

question 147

Multiple Choice

Under a system of flexible exchange rates, an increase in the supply of foreign exchange (an increase in the demand for the dollar) will cause the

• A) dollar to appreciate.
• B) dollar to depreciate.
• C) U.S. trade deficit to decrease.
• D) U.S. inflation rate to increase.

---

Definitions:

Life Insurance Policy

A contract between an individual and an insurance company, where the insurer pays a designated beneficiary a sum of money upon the death of the insured person.

Beneficiary

A person or entity entitled to receive benefits from a will, trust, insurance policy, or other legal agreements.

Divorced

The legal dissolution of a marriage by a court or other competent body.

Proceeds

The total amount of money received from a sale or transaction.