A Rise in the Expected Future Exchange Rate Will Tend

question 8

Multiple Choice

A rise in the expected future exchange rate will tend to cause,other things the same ________.

• A)a depreciation of the domestic currency
• B)no effect on the value of the U.S.dollar in the short-run
• C)an appreciation of the domestic currency
• D)no effect on the value of the U.S.dollar

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Definitions:

Reactance Theory

A psychological theory suggesting that people have an aversive reaction to restrictions of their freedoms, leading to a motivation to regain them.

Forbidden Behaviors

Acts that are prohibited or discouraged within a society or group due to cultural, social, or legal norms and values.

Strict Parents

caregivers who enforce rigid rules and expect high levels of obedience and discipline from their children.

Tempted

The feeling or state of being enticed or inclined to do something, often something unwise or wrong.