If Speculators Believe a Currency Is Undervalued,their Trades in International

question 144

Multiple Choice

If speculators believe a currency is undervalued,their trades in international exchange markets will

• A)increase the surplus of the currency at the existing fixed exchange rate.
• B)decrease the surplus of the currency at the existing fixed exchange rate.
• C)decrease the shortage of the currency at the existing fixed exchange rate.
• D)increase the shortage of the currency at the existing fixed exchange rate.

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Definitions:

Inductive Reasoning

An analytical method where various propositions, assumed to be true or often validated as true, are amalgamated to reach a distinct conclusion.

Intuitive Thought

A cognitive process that creates immediate understanding or knowledge without evident rational thought and inference.

Concrete Reasoning

A form of thinking that is focused on the physical and the now, dealing primarily with observable or tangible facts rather than abstract concepts.

Analytic Thought

A cognitive process that involves breaking down complex information or concepts into smaller, more manageable parts for examination and evaluation.