Multiple Choice
In a world with two products, wheat (W) and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C, and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation
A) Alpha will prevail if world demand for coffee is great relative to its supply.
B) Alpha will prevail if world demand for wheat is weak relative to its supply.
C) Beta will prevail if world demand for coffee is great relative to its supply.
D) Beta will prevail if world demand for wheat is great relative to its supply.
Correct Answer:
Verified
Correct Answer:
Verified
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