Currency traders expect the value of the dollar to rise. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?
A) Demand for dollars will increase, and supply of dollars will decrease.
B) Demand for dollars will increase, and supply of dollars will increase.
C) Demand for dollars will decrease, and supply of dollars will increase.
D) Demand for dollars will decrease, and supply of dollars will decrease.
Answer: A
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Indicate whether the statement is true or false
During the 1970's, U.S. inflation averaged 7% each year and real GDP increased. Holding velocity constant and using the quantity equation, we conclude that
a. money growth must have been greater than the growth of real income. b. money growth must have been less than the growth of real income. c. prices fell during the 1970's. d. output fell during the 1970's.