2) U.S. imports create a domestic demand for foreign currencies, and the satisfa

Question

2) U.S. imports create a domestic demand for foreign currencies, and the satisfaction of this demand:

decreases the supply of foreign currencies held by U.S. banks

decreases the demand for foreign currencies held by U.S. banks

increases the demand for foreign currencies held by U.S. banks

increases the supply of foreign currencies held by U.S. Banks

5) The total volume of business sales in our economy is several times as large as the GDP because:

the GDP does not take taxes into account

the GDP excludes intermediate transactions

the GDP grossly understates the value of our annual output

total sales are in money terms and GDP is always stated in real terms

9) Here are three things you could do if you do not attend your next-door neighbor's barbecue: watch television with some friends (you value this at $8), read a good novel (you value this at $4), or go in to work (you could earn $6 during the barbecue). The opportunity cost of going to your neighbor's barbecue is

a) $6, because this is the only alternative of the three where you actually receive a monetary payment.

b) $4, because this is the lowest valued alternative forfeited.

c) $8, because this is the highest valued alternative forfeited.

$18, because this is the total dollar sum of the alternatives forfeited.

Explanation / Answer

Hi,

Please find the answer as follows:

Part A: Decreases the supply of foreign currencies held by U.S. bank.

Part B: The GDP does not take taxes into account

Part C: $8, because this is the highest valued alternative forfeited.

Thanks.

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