If,at the Current Exchange Rate Between the Dollar and the South

question 25

Multiple Choice

If,at the current exchange rate between the dollar and the South African rand of 6.92 rand per dollar,the dollar is "undervalued," how do you expect demand and supply in the foreign exchange markets to respond?

• A)The demand for the dollar will rise,while the supply of the rand will fall.
• B)The demand for the dollar will fall,while the supply of the rand will rise.
• C)The supply of the dollar will fall,while the demand for the rand will fall.
• D)The supply of the dollar will fall,while the demand for the rand will rise.

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Definitions:

GDP

Gross Domestic Product, abbreviated as GDP, embodies the total market and monetary worth of all products and services that are finalized within a country's borders throughout a defined period.

Depreciation

An accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy.

GDP Deflator

A measure of the price level of all newly produced, domestic, final goods and services in an economy, used to adjust GDP for inflation.

GDP Deflator

A means of determining the price rates for all new, domestically crafted, final goods and services within an economy.