What happens if there is a shortage or a surplus of U.S. dollars in the foreign exchange market?
What will be an ideal response?
If there is a shortage of U.S. dollars, the quantity of U.S. dollars demanded exceeds the quantity supplied. As long as there is a shortage, this upward pressure on the price automatically forces the price higher to its equilibrium.
If there is a surplus of U.S. dollars, the quantity of U.S. dollars demanded is less than the quantity supplied. As long as there is a surplus, this downward pressure on the price automatically forces the price lower to its equilibrium.
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Wealth creating transactions are less likely to occur
a. Without private property rights b. Without contract enforcement c. Both a and b d. None of the above
Suppose labor and capitals are both used to produce output. In the long run, if the wage rate rises while the rental rate on capital remains unchanged,
A. market forces will come into play to bring the prices back to their earlier relationship. B. the process will become more capital intensive. C. the marginal product of capital will rise and the marginal product of labor will fall. D. the process will become more labor intensive.