Why don’t economists agree with backing paper money with a certain commodity, such as gold?
What will be an ideal response?
Supplies of commodities like gold can change unexpectedly and arbitrarily. A sudden increase in the availability of a commodity could increase the money supply too quickly and trigger inflation. A persistent scarcity of a commodity could reduce the money supply too much and cause a recession and unemployment.
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If the expected future U.S. exchange rate falls, then in the foreign exchange market the current
A) supply of dollars decreases. B) demand for dollars increases. C) quantity supplied of dollars decreases. D) supply of dollars increases. E) quantity supplied of dollars increases.
If the exchange rate changes such that fewer euros, the French currency, are required to buy one dollar, then
A. Americans will buy fewer goods and services from France. B. the French will buy fewer goods and services from the U.S. C. the dollar has appreciated in value. D. the euro has depreciated in value.