If the Equilibrium Exchange Rate Between U

question 53

Multiple Choice

If the equilibrium exchange rate between U.S.dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen,then a __________ exists.

• A) shortage of dollars
• B) surplus of dollars
• C) surplus of yen
• D) shortage of yen
• E) b and d

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Definitions:

Demand

Demand in economics is defined as consumers' willingness and ability to purchase goods or services at a given price over a specific period of time.

Normal Goods

Goods for which demand increases as consumer income rises, and decreases when consumer income falls.

Inferior Goods

Goods for which demand decreases as the income of consumers increases, opposite to normal goods.

Quantity Demanded

Refers to the total amount of a good or service that consumers are willing and able to purchase at a given price level in a given period.