Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?a. A decrease in domestic interest ratesO b. An increase in foreign interest ratesc. Stable domestic prices while the nation's trading partners are experiencing 10 percent inflationO d. Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices

The foreign exchange market determines the exchange rate price of the foreign currency. The…

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market? O a. A decrease in domestic interest rates O b. An increase in foreign interest rates O c. Stable domestic prices while the nation's trading partners are experiencing 10 percent inflation O d. Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices

Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market? O a. A decrease in domestic interest rates O b. An increase in foreign interest rates O c. Stable domestic prices while the nation's trading partners are experiencing 10 percent inflation O d. Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 43P: In 2001, the United Kingdoms economy exported goods worth 192 billion and services worth another 77...

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In some cases, governments will intervene in the currency markets to incresae or decrease the value of the country's currency. Which of the following is an example of direct intervention in foreign exchange markets? A. The European Central Bank lowers interest rates to increase the value of the euro. B. The Japanese government purchasing JPY with USD to increase the value of the Japanese yen. C. China imposing barriers on imports from Europe. D. The U.S. lowers interest rates to decrease the value of the U.S. dollar.
Under a system of flexible exchange rates, what will correct a deficit in a country's balance of payments? a. an appreciation in the nation's currency b. a decline in the nation’s domestic price level c. a depreciation in the nation's currency d. an increase in the nation’s inflation rate 2. Which of the following would supply Canadian dollars to the foreign exchange market? a. an increase in the number of Canadians going to Las Vegas over the holidays b. an increase in spending due to American tourists in Canada c. the sale of a Canadian corporation to a German investor d. the sale of wheat from Manitoba to a European bakery
If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.
The graph shows the supply curve of Canadian dollars. Draw a new supply curve that shows the effect of a rise in the expected future exchange rate. Label it. A change in the expected future exchange rate changes the supply of Canadian dollars________, and a change in Canadian demand for imports changes the supply of Canadian dollars O A. today; today B. in the future; today C. today; in the future D. in the future; in the future 120 MacBook Pro 110 100- 90- 80- 70- Exchange rate (Canadian cents per Canadian dollar) Click the graph, choose a tool in the palette and follow the instructions to create your graph. So 70 80 90 100 10 20 30 40 50 60 Quantity (billions of Canadian dollars per day) >>> Draw only the objects specified in the question.
If for some reason Americans desired to increase their purchases of foreign assets, then other things the same A. both the real exchange rate and the quantity of dollars exchanged in the market for foreign currency would rise. B. both the real exchange rate and the quantity of dollars exchanged in the market for foreign currency would fall. C. the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign currency would fall. D. the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign currency would rise.
What would you expect each of the following developments to do to the price of dollars in euros? a. The incoming Biden administration eliminates the tariffs that had been imposed by the Trump administration on goods from the European Union (while the EU does not change its trade policy). b. Large budget deficits in the Europe cause the real interest rate in Europe to rise relative to that in the United States. c. Inflation is lower in the United States than in Europe. d. There is a shift in European tastes toward American goods.
If there is a decrease in the desire of Americans to purchase goods and services from other countries and put money in foreign banks and businesses then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would increase and the US dollar would appreciate. B. The equilibrium quantity of foreign currency would decrease and the US dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the US dollar would depreciate.
20. According to the theory of uncovered interest parity, which of the following variables does not affect Argentina's current nominal exchange rate with the U.S.? a. Argentina's bond default risk. b. Argentina's nominal interest rate. c. Demand for Argentina's exports. d. The future nominal exchange rate between the two countries. e. None of the above: each of them affects the nominal exchange rate. 21. According to the theory of uncovered interest parity, Argentina's current nominal exchange rate with the U.S. depends on which of the following variables? a. The money multiplier u in Argentina. b. Autonomous spending in the U.S. c. The nominal interest rate in the U.S. d. Argentina's current account balance CA. e. None of the above.
The value of the Russian Ruble changed from 94 to the dollar to 91 to the dollar. What is the likely effect of this change in the foreign exchange market? A. It will make Russia's imports cheaper but may harm its export competitiveness. B. It will boost Russia's exports, making them more competitive. I c. It will have no impact on trade, as exchange rates do not influence international commerce. D. It will encourage capital outflows and discourage foreign investment.
Someone please answer this questionIf international speculators lose confidence in foreign economies and want to move some of their wealth into the U.S. economy, then in the short run there is A. a decrease in the value of the U.S. dollar in foreign exchange markets, a lower level of U.S. output and a higher U.S. price level. B. an increase in the value of the U.S. dollar in foreign exchange markets, a lower level of U.S. output and a lower U.S. price level. C. an increase in the value of the U.S. dollar in foreign exchange markets, a higher level of U.S. output and a higher U.S. price level. D. a decrease in the value of the U.S. dollar in foreign exchange markets, a lower level of U.S. output and a lower U.S. price level.
If the Japanese yen appreciates against the U.S. dollar a. Americans should find Japanese goods are now less expensive b. Japanese residents would find Japanese goods are relatively less expensive than American goods c. U.S. goods should have an easier time competing against Japanese goods in both countries d. Japanese goods should have an easier time competing against U.S. goods in both countries
In the foreign exchange market, when the U.S. interest rate rises, the supply of dollars ________ and the foreign exchange rate ________. A. decreases; rises B. increases; falls C. increases; rises D. increases; does not change E. decreases; falls