When there is a shortage of a product in a market the:
a. price will fall.
b. price must be below the equilibrium price.
c. price must be above the equilibrium price.
d. producers will reduce output and sales will fall.
b
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Suppose that the U.S. interest rate is 5 percent and the Turkish interest rate is 50 percent. The effect of this difference in the foreign exchange market is that
A) financial capital stops moving. B) an American investor is guaranteed to make an additional 45 percent in dollar terms by investing in Turkey. C) investors expect the Turkish currency to rise in value (appreciate) against the dollar. D) investors expect the Turkish currency to fall in value (depreciate) against the dollar.
An American consumer buys a French luxury product in New York. In the U.S. balance of payments accounts, this transaction directly appears in
A) the official settlements account. B) the imports part of the current account. C) the net transfers part of the current account. D) the capital and financial account.