With a flexible exchange-rate system, what determines the exchange rate between two countries?
(A) Supply and demand.
(B) The day-to-day changes in one currency.
(C) Inflation and interest rates.
(D) The value of gold.
Ans: (A) Supply and demand.
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The goal of managers is to manage resources in such a way
A) to make them worth as much as they would be in their next best use. B) to make them worth more than they would be in any other use. C) to cover the cost of capital. D) to cover all opportunity costs.
If imports = 500 billion euros, exports = 700 billion euros, purchases of domestic assets by foreign residents = 600 billion euros, and purchases of foreign assets by domestic residents = 800 billion euros, what is the quantity of euros demanded in the market for foreign-currency exchange?
a. 1,100 billion euros b. 600 billion euros c. 500 billion euros d. 200 billion euros