Suppose the Real Exchange Rate Is Such That the Market

question 35

Multiple Choice

Suppose the real exchange rate is such that the market for foreign-currency exchange has a surplus.This surplus will lead to

• A)an appreciation of the dollar,an increase in U.S.net exports,and so an increase in the quantity of dollars demanded in the foreign exchange market.
• B)an appreciation of the dollar,a decrease in U.S.net exports,and so a decrease in the quantity of dollars demanded in the foreign exchange market.
• C)a depreciation of the dollar,an increase in U.S.net exports,and so an increase in the quantity of dollars demanded in the foreign exchange market.
• D)a depreciation of the dollar,a decrease in U.S.net exports,and so a decrease in the quantity of dollars demanded in the foreign exchange market.

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Definitions:

Punishable

Describing an action or offense that can be penalized by law, typically through fines, imprisonment, or other legal sanctions.

Serious Crime

A criminal offense that is considered more severe and is usually punishable by significant penalties, including long-term imprisonment.

Imprisoned

The state of being confined in prison as a punishment for crimes or as an awaiting trial condition.

Felony

A serious criminal offense, typically punishable by imprisonment for more than one year or by death.