Why would people outside the United States choose to hold dollars?
What will be an ideal response?
At times, many countries experience high inflation and their households and firms switch to using dollars instead of their domestic currency. Some countries use the dollar as legal tender. Also, during the financial crisis of 2007-2009, many foreigners chose to hold dollars as a safe haven.
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For an inferior good, the income effect
a. is zero b. at least partially offsets the substitution effect c. operates to increase the quantity demanded d. helps explain why the demand curve slopes upward e. does not exist
A high-ranking corporate official of a well-known company is unexpectedly sentenced to prison for criminal activity in trading stocks. This should
a. raise the price and raise the present value of the corporation's stock. b. raise the price and lower the present value of the corporation's stock. c. lower the price and raise the present value of the corporation's stock. d. lower the price and lower the present value of the corporation's stock.