In the foreign exchange market, how does each of the following influences affect the demand for dollars and the demand curve for dollars?
a) an increase in the exchange rate.
b) an increase in the U.S. interest rate.
c) a fall in the expected future exchange rate.
a) The increase in the exchange rate decreases the quantity of dollars demanded and creates an upward movement along the demand curve for dollars.
b) An increase in the U.S. interest rate increases the demand for dollars and shifts the demand curve for dollars rightward.
c) A fall in the expected future exchange rate decreases the demand for dollars and shifts the demand curve for dollars leftward.
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The principal-agent problem refers to the fact that firms must
A) choose between economic efficiency and technological efficiency. B) choose between a managerial and an incentive system. C) devise incentives to get employees to work in the best interest of the firm's owners. D) choose between operating as a partnership or corporation.
A shift in tastes toward American goods ________ net exports in the U.S. and causes the quantity of aggregate output demanded to ________ in the U.S., everything else held constant
A) decreases; rise B) decreases; fall C) increases; rise D) increases; fall