If a Dollar Is More Expensive in Terms of a Foreign

question 129

Multiple Choice

If a dollar is more expensive in terms of a foreign currency than the equilibrium exchange rate, a ____ exists at the current exchange rate that will put ____ pressure on the exchange value of a dollar.

• A)​surplus of dollars; downward
• B)​surplus of dollars; upward
• C)​shortage of dollars; downward
• D)​shortage of dollars; upward

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Definitions:

Liability

A legal obligation or debt that an entity is required to pay to another.

Financial Capital

Economic resources measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services.

Profit Rate

The ratio of net profits to total revenues of a business, indicating its efficiency at generating profit.

Inventory

The total amount of goods and raw materials held by a business to facilitate production or meet customer demand.