If a Country's Budget Deficit Increases,then in the Market for Foreign-Currency

question 107

Multiple Choice

If a country's budget deficit increases,then in the market for foreign-currency exchange,

• A)the supply of its currency shifts right,so the exchange rate falls.
• B)the demand for its currency shifts right,so the exchange rate rises.
• C)the supply of its currency shifts left,so the exchange rate rises.
• D)the demand for its currency shifts left.so the exchange rate falls.

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Definitions:

Break-Even Level

The point at which total costs and total revenue are equal, meaning there is no net loss or gain, and the initial investment has been recovered.

Derived-Demand Inventory

Inventory levels that are based on the anticipated demand for finished goods, driving the demand for raw materials as well.

Anticipated Finished Goods

The forecasted amount of products that will be completed and ready for sale at the end of a production cycle.

Restocking Inventory

The process of replenishing goods or materials within a business to ensure sufficient supply for operation or sale.