I Know When I Shop at the Local Grocery Store

question 217

Multiple Choice

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

• A)People usually exploit opportunities to make themselves better off.
• B)There are gains from trade.
• C)One person's spending is another person's income.
• D)Overall spending sometimes gets out of line with the economy's productive capacity.

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Definitions:

Spot Exchange Rate

The present rate at which one can purchase or sell a currency for immediate transfer.

Forward Exchange Rate

A contractually fixed exchange rate for the future exchange of currencies at a specified date, used to hedge against foreign exchange risk.

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to exploit price differences for a profit.

Risk-free Rate

The expected yield from an investment that carries no risk of losing money, often identified by the returns on government bonds.