Economics · May / June 2019 · Paper 12 · Question 28
The world demand for oil is price-inelastic and oil is paid for in US dollars. If the price of oil falls rapidly, how might it affect the exchange rate of the US dollar?
- Agreater demand for US$; value increases
- Bgreater supply of US$; value falls
- Cless demand for US$; value falls
- Dless supply of US$; value increases
As printed in the paper
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Correct answer: C. less demand for US$; value falls
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