Suppose we were analyzing the Turkish lira per euro foreign exchange market. If the Euro-Area's price level falls relative to Turkey and nothing else changes, then the:
a. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing an appreciation of the euro.
b. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market rises, causing an uncertain change in the value of the euro.
c. The supply of euros in the foreign exchange market rises, and the demand for euros in the foreign exchange market falls, causing a depreciation of the euro.
d. The supply of euros in the foreign exchange market falls, and the demand for euros in the foreign exchange market rises, causing an appreciation of the euro.
e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
.D
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Suppose you are a manager for a company that produces grape jelly. Which of the following is the best way for you to reduce your risk?
A) acquire a derivative that increases in value if grape prices increase B) acquire a derivative that increases in value if grape jelly prices increase C) sell a derivative that increases in value if grape prices increase D) sell a derivative that increases in value if grape jelly prices increase
Every economic model should include money as a variable. This statement is
A) true, because every transaction in the economy uses money. B) true, because the federal reserve is very important. C) false, because some transactions in the economy are transacted without money. D) false, because a model can get unnecessarily complex if it includes money.