Other Things the Same,if the Price Level Rises,people

question 20

Multiple Choice

Other things the same,if the price level rises,people

• A)increase foreign bond purchases,so the dollar appreciates.
• B)increase foreign bond purchases,so the dollar depreciates.
• C)increase domestic bond purchases,so the dollar appreciates.
• D)increase domestic bond purchases,so the dollar depreciates.

---

Definitions:

Cost of the Hedge

The total expenses associated with establishing and maintaining a hedge, including transaction fees and the difference in interest costs.

Forward Contract

A personalized agreement where two parties agree to buy or sell an asset at an agreed-upon price at a later date.

Derivative Instrument

A derivative instrument is a financial contract whose value is dependent on the performance of underlying assets, indexes, or rates.

Hedged Item

An asset, liability, firm commitment, or highly probable forecast transaction identified by an entity to manage risks through a hedging relationship.