This week’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 6, Series 7, Series 62, Series 65, and Series 82):
A Oregon hazelnut farm exports all of their hazelnuts to China and a Chinese trampoline manufacturer exports all of their trampolines to the U.S. Which of the following is true?
Answers:
A: Both the hazelnut farm and the Chinese trampoline manufacturer prefer a strong dollar
B: Both the hazelnut farm and the Chinese trampoline manufacturer prefer a weak dollar
C: The hazelnut farm prefers a strong dollar and the Chinese trampoline manufacturer prefers a weak dollar
D: The hazelnut farm prefers a weak dollar and the Chinese trampoline manufacturer prefers a strong dollar
Correct Answer: D
Rationale: To get this kind of question correct, think about where the goods are being sold. Groups that sell goods in the U.S. prefer a strong dollar. Foreign exporters and U.S. importers both sell goods in the U.S. so they prefer a strong dollar. In contrast, groups that sell goods in a foreign country prefer a weak dollar. Foreign importers and U.S. exporters sell goods in a foreign country so they prefer a weak dollar. The hazelnut farm is selling their goods outside of the U.S. so they prefer a weak dollar. The Chinese trampoline manufacturer is selling their goods in the U.S. so they prefer a strong dollar.
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