Under a System of Freely Flexible (Floating)exchange Rates, a U

question 133

Multiple Choice

Under a system of freely flexible (floating) exchange rates, a U.S. trade deficit with Mexico will tend to cause

• A)the U.S. government to ration pesos to U.S. importers.
• B)a flow of gold from the United States to Mexico.
• C)an increase in the peso price of dollars.
• D)an increase in the dollar price of pesos.

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Definitions:

Alcan

Alcan was a Canadian mining company and manufacturer of aluminum products, which became part of Rio Tinto Alcan after its acquisition.

Systematic Risk

The inherent risk associated with the entire financial system or market, which cannot be eliminated through diversification.

Risk-Averse

A description of an investor or investment strategy that prioritizes the minimization of risk over potential returns.

Total Risk

Total risk encompasses all the various types of risk a business or investment might face, including both systematic and unsystematic risks.