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:

Savonarola

Girolamo Savonarola was a Dominican friar and preacher in Renaissance Florence who is known for his prophecies of civic glory, the destruction of secular art and culture, and his call for Christian renewal.

Camera Degli Sposi

A room in the Ducal Palace of Mantua, Italy, celebrated for its frescoes by Andrea Mantegna that include trompe l'oeil effects and courtly scenes.

Mantegna

Italian Renaissance artist Andrea Mantegna, celebrated for his mastery in perspective and detailed frescoes that vividly depict historical and religious scenes.

Linear Perspective

A technique in art, specifically drawing and painting, that creates the illusion of depth and volume on a flat surface by depicting objects smaller as their distance from the observer increases.