When a Nation's Currency Is Different from Equilibrium, It Is

question 131

Multiple Choice

When a nation's currency is different from equilibrium, it is either overvalued or undervalued. To restore equilibrium, either a ____ or ____ must occur.

• A) return to a balanced budget; more government belt-tightening
• B) nominal exchange rate change; a change in the nation's price level
• C) national cut of imports; a national increase of exports
• D) national cut of exports; a national increase of imports

Understand how consumer prices and interest rates are interconnected.

Recognize who benefits from inflation and under what circumstances.

Differentiate between terms such as present value, GDP, and time value of money.

Clarify the goals and components of personal financial planning.

---

Definitions:

Social Contract

A theory or model that explains the legitimacy of the authority of the state over the individual.

Neoliberalism

An economic and political ideology favoring free-market capitalism, deregulation, and reduction in government spending on social services.

Social Decisions

Decisions made within a group or society that affect the welfare of the community and involve considerations beyond individual gain.

Ethical Principles

Fundamental guidelines that dictate behavior and conduct, often used to guide actions in professional and personal settings to ensure fairness, integrity, and respect.