The Exchange-Rate Effect Is Based,in Part,on the Idea That

question 23

Multiple Choice

The exchange-rate effect is based,in part,on the idea that

• A)a decrease in the price level reduces the interest rate.
• B)an increase in the price level causes investors to move some of their funds overseas.
• C)an increase in the price level causes domestic goods to become less expensive relative to foreign goods.
• D)a decrease in the price level reduces spending on net exports.

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Definitions:

Word Root

The fundamental part of a word that contains its primary meaning, to which prefixes and suffixes can be attached to create new words.

Prefix

A letter or group of letters added to the beginning of a word to alter its meaning or create a new word.

Suffix

An affix that is added to the end of a word to alter its meaning or create a new word.

Combining Forms

In medical terminology, the word root with a combining form vowel (usually an “o”) that aids in making the word pronounceable, particularly when adding a suffix that begins with a consonant.