-In the Figure Above, the Shift in the Demand Curve

question 4

Multiple Choice

-In the figure above, the shift in the demand curve for U.S. dollars from D? to D? could occur when

• A) the expected future exchange rate increases.
• B) the U.S. interest rate falls.
• C) people expect that the dollar will appreciate.
• D) foreign interest rates fall.

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing their gain from the transaction.

Market Equilibrium

A market state where the quantity demanded equals the quantity supplied, leading to no pressure on the price to either rise or fall.

Good

A material item or service that satisfies a want or need and is available for sale or trade.

Deadweight Loss

Deadweight loss represents the efficiency lost to an economy because of market inefficiencies or interventions, where resources are not allocated optimally.