All Else Being Equal, If Asian Restaurants Switch from Serving

question 25

Multiple Choice

All else being equal, if Asian restaurants switch from serving French champagne to serving California wines, then the market equilibrium value of the exchange rate for the U.S. dollar will:

• A)rise.
• B)fall.
• C)become fixed.
• D)either rise or fall depending on whether the supply or demand for dollars changes more.

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Definitions:

Rate

A measure used to quantify the frequency, occurrence, or percentage of a certain event or outcome over a specified period or among a specific sample size.

Additional Money

Funds that are required or provided beyond the initially agreed amount or investment.

Simple Interest

Simple interest is a method of calculating interest where the interest charge is computed only on the original principal, and not on the interest accrued over time.

Account

A record or statement that reflects the financial transactions and their effect on an asset, liability, equity, revenue, or expense.