How Will an Interest Rate Increase in the United States

question 215

Multiple Choice

How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar.)

• A)The equilibrium exchange rate will increase,and the equilibrium quantity of dollars traded cannot be determined.
• B)The equilibrium exchange rate will decrease,and the equilibrium quantity of dollars traded cannot be determined.
• C)The equilibrium exchange rate cannot be determined,and the equilibrium quantity of dollars traded will increase.
• D)The equilibrium exchange rate will increase,and the equilibrium quantity of dollars traded will increase.

---

Definitions:

Product Liability

The legal obligation of manufacturers and sellers to compensate for losses or injuries caused by defects or malfunctions of their products.

Implied Warranties

Legal assurances that are not explicitly stated but are assumed in transactions, such as the assumption that goods are of merchantable quality.

Reasonable Inspection

A thorough yet fair examination or check, often used in contracts or legal contexts to ensure compliance with standards.

Warranty Action

Legal action taken to enforce the terms of a warranty, which is a guarantee provided by a seller to a buyer regarding the condition of a product.