When There Is a Permanent Fall in the Foreign Money

question 90

Multiple Choice

When there is a permanent fall in the foreign money supply, the exchange rate:

• A) falls in the short run and rises slightly in the long run.
• B) falls in the short run and falls more in the long run.
• C) rises in the short run and falls slightly in the long run.
• D) rises in the short run and rises more in the long run.

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Definitions:

Direct Exporting

A method of international business where a company sells its products directly to buyers in a foreign market without the use of intermediaries.

Agricultural Producer

An individual or company involved in the cultivation of plants and rearing of animals for food, fiber, and other products.

World Bank

An international financial institution offering loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.

Agricultural Exports

Products derived from farming and agriculture that are sold and shipped to other countries, contributing to a nation's economy.