A spot contract is a(n):
a. promise to purchase a foreign currency in 30 days.
b. promise to purchase a foreign currency in 90 days.
c. contract for the immediate exchange of currencies.
d. agreement to sell currencies at a fixed price indefinitely.
Ans: c. contract for the immediate exchange of currencies.
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What would happen to a low-income nation if its liability currency appreciated against its own currency?
A) Its external wealth would rise because low-income nations have more assets than liabilities. B) Its external wealth would not be affected because currency values are fixed. C) Its external wealth would fall because low-income nations tend to have more external liabilities denominated in other currencies. D) Its external wealth would rise because of the ability of its monetary authority to print more money.
Which of the following will cause a downward movement along the aggregate demand curve?
a. An increase in the price level of all goods and services b. A decrease in the price level of all goods and services c. A technological improvement in the country d. An increase in government spending