A Decrease in the Demand for Dollars on the Foreign

question 94

Multiple Choice

A decrease in the demand for dollars on the foreign exchange market,all else equal,will result in:

• A)appreciation of the U.S. dollar and depreciation of the foreign currency.
• B)appreciation of the U.S. dollar and appreciation of the foreign currency.
• C)depreciation of the U.S. dollar and depreciation of the foreign currency.
• D)depreciation of the U.S. dollar and appreciation of the foreign currency.

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Definitions:

Market Basket

A collection of goods and services considered representative for measuring inflation or the cost of living in an economy.

Price Increase

A price increase refers to a rise in the cost of goods or services, which can affect consumer demand and purchasing power.

CPI

This index, the Consumer Price Index, measures how the average prices of various consumer services and goods, including food, transportation, and healthcare, evolve using a weighted average technique.

Tooth Fairy

A mythical figure in Western cultures that exchanges lost baby teeth for a small payment when placed under a child's pillow.