Which of the Following Events Would Most Likely Result in an Appreciation

question 62

Multiple Choice

Which of the following events would most likely result in an appreciation of the U.S. dollar?

• A) U.S. inflation is very high.
• B) The Fed indicates that it will raise U.S. interest rates.
• C) Future U.S. interest rates are expected to decline.
• D) Japan is expected to increase interest rates in the near future.

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Definitions:

Price Elasticity

The evaluation of demand's reaction to fluctuations in the price of a particular good.

Responsiveness

The degree to which a variable responds to a change in an underlying factor, often used in economic contexts to describe changes in supply, demand, price, etc.

Price Elasticity

A measure of how much the quantity demanded or supplied of a product changes in response to a change in its price.

Inelastic

A description of a situation where the quantity demanded or supplied changes by a smaller percentage than the changes in price.