In 2010, fears were growing that the dollar would experience a significant decline in value. What are the likely implications for the euro-dollar exchange rate?
What will be an ideal response?
If people expect the dollar to decline in value, Δ will be negative, thus increasing the expected foreign return on assets. This should lead to an appreciation of the euro relative to the dollar.
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The market demand curve is derived by:
a. studying an individual's demand for a product over a year. b. comparing the monthly consumption of a group of people. c. surveying a set of consumers and ascertaining their preferences. d. adding up the quantities that consumers in a market are willing and able to purchase at each price. e. calculating the average price a random sample of consumers are willing to pay for a product.
Moral hazard is the term used to describe the situation in which:
a. a consumer may buy a low-quality product. b. consumers receive a lower price because of a mistake on the part of the clerk. c. a consumer is being compensated for a defective product. d. people may change their behavior after they have signed a contract or agreed to a specified behavior. e. people want to change their behavior after they have signed a contract or agreed to a specified behavior but are unable to do so.