If the Price of a Local Currency Increases,then It Follows

question 64

Multiple Choice

If the price of a local currency increases,then it follows:

• A) holders of the local currency will see the price of foreign goods increase.
• B) It is equivalent to an increase in the price of the foreign currency.
• C) The demand for local currency will increase.
• D) There will be an increase in the quantity of local currency supplied to the market.

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Definitions:

Goods

Physical items that are produced and consumed by individuals or businesses to satisfy needs or wants.

Marginal Rate

The rate at which one variable changes relative to a change in another variable, often used in the context of marginal tax rates or marginal rates of substitution.

Convex Preferences

A preference structure where the consumer prefers mixed bundles of goods to extreme bundles, represented graphically by a bowed-inward indifference curve.

Monotonic Preferences

A preference pattern where more of a good is always preferred to less, maintaining a consistent order.