Between 1998 and the End of 2000, the U

question 83

Multiple Choice

Between 1998 and the end of 2000, the U.S.ran a large trade deficit; this should have caused the dollar to depreciate against foreign currencies but instead the dollar appreciated.The main reason for this is:

• A)Foreign exchange markets are slow to react
• B)The supply of dollars actually fell
• C)The dramatic increase in U.S.stock prices attracted a lot of foreign capital increasing the demand for dollars by more than the increase in the supply of dollars
• D)The demand for dollars shifted left by more than the supply of dollars shifted right

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Definitions:

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Social Institutions

Established systems and structures within society that dictate certain patterns of behavior, such as family, religion, education, and government.

Network Theory

A theoretical framework that analyzes social, economic, or natural phenomena in terms of nodes and the connections between them, emphasizing the importance of relationships and interactions.