If a Country's Budget Deficit Increases,then in the Market for Foreign-Currency

question 107

Multiple Choice

If a country's budget deficit increases,then in the market for foreign-currency exchange,

• A)the supply of its currency shifts right,so the exchange rate falls.
• B)the demand for its currency shifts right,so the exchange rate rises.
• C)the supply of its currency shifts left,so the exchange rate rises.
• D)the demand for its currency shifts left.so the exchange rate falls.

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Definitions:

Deposit In Transit

Funds that have been sent to a bank but have not yet been recorded in the bank's records or the depositor's account balance.

Outstanding Checks

Checks that have been written and recorded in the issuing company's books but not yet cashed by the recipient.

NSF Checks

Non-Sufficient Funds (NSF) checks are checks that cannot be processed due to insufficient funds in the account on which they are drawn.

Bank Service Charge

Fees charged by banks for various services provided to customers, such as account maintenance or transaction processing.