At the Original Exchange Rate an Import Quota

question 152

Multiple Choice

At the original exchange rate an import quota

• A)creates a surplus in the market for foreign-currency exchange,so the exchange rate rises.
• B)creates a surplus in the market for foreign-currency exchange,so the exchange rate falls.
• C)creates a shortage in the market for foreign-currency exchange,so the exchange rate rises.
• D)creates a shortage in the market for foreign-currency exchange,so the exchange rate falls.

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Definitions:

Investment Projects

Initiatives or plans undertaken by individuals or organizations to allocate resources with the expectation of generating future profits.

Budget Set

The collection of all possible bundles of goods and services that a consumer can afford given their income and the prices of goods.

Interest Rate

The amount of a loan that is subject to interest charges for the borrower, typically expressed as an annual percentage of the current loan balance.

Consumption

Households' practice of using goods and services.