The Exchange-Rate Effect Is Based,in Part,on the Idea That

question 23

Multiple Choice

The exchange-rate effect is based,in part,on the idea that

• A)a decrease in the price level reduces the interest rate.
• B)an increase in the price level causes investors to move some of their funds overseas.
• C)an increase in the price level causes domestic goods to become less expensive relative to foreign goods.
• D)a decrease in the price level reduces spending on net exports.

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Definitions:

Starch

Coiled polysaccharide of glucose monomers. Principal form of stored sugars in plants.

Fatty Acid

Organic compound that consists of an acidic carboxyl group “head” and a long hydrocarbon “tail.” Can be saturated or unsaturated.

Hydrophilic

Describes a substance that dissolves easily in water.

Carboxyl Group

A functional group consisting of a carbon atom double-bonded to an oxygen atom and single-bonded to a hydroxyl group (-COOH), found in organic acids.