Refer to Figure 29-1. Currency speculators believe that the value of the euro will increase relative to the dollar. Assuming all else remains constant, how would this be represented?
A) Supply would decrease, demand would increase and the economy moves from A to D to C.
B) Supply would increase, demand would increase and the economy moves from D to A to B.
C) Supply would decrease, demand would decrease and the economy moves from B to C to D.
D) Supply would increase, demand would decrease and the economy moves from C to B to A.
D
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Which of the following statements is correct?
a. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a lower cost. b. Corrective taxes distort economic incentives. c. Corrective taxes are often preferred over direct regulation because they typically reduce externalities at a faster rate. d. Both a and b are correct.
If exchange rates end up in the right ranges, the free market will drive each country to shift resources into those sectors in which it enjoys a comparative advantage.
Answer the following statement true (T) or false (F)