If,at the Current Exchange Rate Between the Dollar and the South

question 82

Multiple Choice

If,at the current exchange rate between the dollar and the South African rand of 6.92 rand per dollar,the rand is "undervalued," how do you expect demand and supply in the foreign exchange markets to respond?

• A)The demand for the dollar will fall,while the supply of the rand will rise.
• B)The demand for the dollar will rise,while the supply of the rand will fall.
• C)The supply of the dollar will rise,while the demand for the rand will rise.
• D)The supply of the dollar will rise,while the demand for the rand will fall.

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Definitions:

U-Shaped Long-Run Average Cost Curve

This describes the phenomenon where, over time, average costs first decrease with increased production, hit a minimum, and then increase with further production increase, forming a U-shape.

Minimum Cost

The lowest possible expense at which a particular set of goods or services can be produced or acquired.

Long-Run Average Cost Curve

A graphical representation showing how the average cost of production changes as the scale of production is altered over the long term, reflecting economies and diseconomies of scale.

Minimum Cost

The lowest possible cost at which a particular quantity of goods or services can be produced or obtained, while still maintaining efficiency and effectiveness.