In a given year, the value of U.S. exports and imports ________
A) is equal to the value of U.S. foreign exchange transactions
B) is a relatively large fraction of U.S. foreign exchange transactions
C) is a relatively small fraction of U.S. foreign exchange transactions
D) does not involve a foreign exchange transaction
C
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When exchange rates are fixed and the foreign nation's interest rate increases, what happens next?
A) The home nation's IS curve shifts out because of a depreciation and an increase in the trade balance. B) The home nation's LM curve shifts right, and its interest rate falls. C) Fixed exchange rates force the home nation to raise its interest rates. D) The home nation and the foreign nation are always in equilibrium, so no changes occur.
When logging in the Pacific Northwest destroys forests that hikers would have used for eco-tourism, the destruction of the trails is an example of
A) an external cost. B) a private cost. C) a government cost. D) an external benefit. E) None of the above answers is correct.