If a Dollar Will Currently Purchase 120 Japanese Yen but It

question 112

Multiple Choice

If a dollar will currently purchase 120 Japanese yen but it is expected that one year from now a dollar will purchase 130 yen:

• A) the demand for dollars now will increase.
• B) the demand for dollars now will decrease.
• C) the dollar is expected to depreciate.
• D) the yen is expected to appreciate.

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Definitions:

Opportunity Cost

The value of the next best alternative forgone as a result of making a decision to pursue a certain action.

Economic Efficiency

The optimal distribution of resources in a manner that maximizes the total utility to all individuals in the economy.

Governmental Direction

Guidance or regulation provided by government bodies to influence or control certain activities, industries, or economic policies.

Roundabout Production

An economic concept that refers to more capital-intensive and indirect methods of production, which, although initially more time-consuming and costly, lead to greater efficiencies and outputs in the long run.