Under a System of Flexible Exchange Rates, an Increase in Demand

question 140

Multiple Choice

Under a system of flexible exchange rates, an increase in demand for a nation's currency in the foreign exchange market will:

• A)​cause the nation's currency to appreciate.
• B)​make it more expensive for the nation to import goods.
• C)​cause the nation's balance on current account to shift toward a deficit.
• D)​make it less expensive for foreigners to buy the nation's goods.

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Definitions:

Dependent Variable

A variable in an experiment that is affected by changes in the independent variable.

Influenced

Refers to being affected or altered by an external factor or variable.

Sample Regression Line

This is the line obtained from the regression analysis of sample data, used to predict the dependent variable values from the independent variable.

Dependent Variable

A variable in an experiment or model that is expected to change in response to changes in the independent variable.