A Canadian traveling to the United States converts $100 Canadian into 80 U.S. dollars. One month later he does the same thing and receives only 86 U.S. dollars. There are no transactions costs. The Canadian-U.S. exchange rate has and the Canadian dollar has relative to the U.S. dollar O A. fallen; appreciated OB. increased; appreciated OC. not changed; remained stationary OD. fallen; depreciated O E. increased; depreciated T
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- A Canadian traveling to the United States converts $100 Canadian into 80 U.S. dollars. One month later he does the same thing and receives only 86 U.S. dollars. There are no transactions costs. The Canadian-U.S. exchange rate has and the Canadian dollar has relative to the U.S. dollar. O A. fallen; appreciated O B. increased; appreciated O C. not changed; remained stationary OD. fallen; depreciated O E. increased; depreciatedA Canadian traveling to the United States converts $100 Canadian into 80 U.S. dollars. One month later he does the same thing and receives only 86 U.S. dollars. There are no transactions costs. The Canadian-U.S. exchange rate has OA. fallen; appreciated OB. increased appreciated OC. not changed; remained stationary OD. fallen; depreciated O E. increased; depreciated and the Canadian dollar has relative to the U.S. dollarThe demand for Australian dollars in the foreign exchange market equals 14000 – 3000e and thesupply of Australian dollars in the foreign exchange market equals 2000 + 2000e, where e is thenominal exchange rate expressed in euros per Australian dollar. If the Australian dollar is fixed at 2euros per Australian dollar, then to maintain this fixed rate, what is the required change in theReserve Bank of Australia’s holdings of euros? 1increase by 4000 euros 2decrease by 2000 euros 3decrease by 4000 euros 4increase by 2000 euros
- Purchasing power parity theory would suggest that if the Canadian price of a basket of goods is C$1,800, but the same basket in the United States is U.S.$1,300, and the actual exchange rate is C$1.30 = U.S.S1.00, then the value of the Canadian dollar should O A. depreciate by approximately 8.9 percent. O B. depreciate by approximately 6.2 percent. OC. appreciate by approximately 8.9 percent. O D. appreciate by approximately 6.2 percent. O E. remain unchanged.A box of chocolate candy costs 28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that purchasing power parity (PPP) holds, what is the current exchange rate? Ⓒa 1 U.S. dollar equals 1.44 Swiss francs Ob. 1 U.S. dollar equals 1.21 Swiss francs Oc1 US dollar equals 1.29 Swiss francs d. 1 U.S. dollar equals 0.69 Swiss francs e. 1 U.S. dollar equals 0.85 Swiss francsWhen the exchange rate between the U.S. dollar and the euro changes from 1.07 euros per dollar to 0.93 euros per dollar, then the O A. U.S. dollar has depreciated against the dollar. OB. euro has depreciated against the dollar. O C. U.S. dollar has depreciated against the euro. D. euro has depreciated against the euro. O E. U.S. dollar has appreciated against the euro.
- When the US Dollar is strong, this means that while US Exporters the US consumers a) find it difficult to compete internationally; see increased prices in imported goods. O b) become internationally competitive; enjoy cheaper imports. Oc) become internationally competitive; see increased prices in imported goods. d) find it difficult to compete internationally; enjoy cheaper imports.Based on the complete model of exchange rate determination, a permanent increase of 8% in the domestic money supply will cause O overshooting of the home exchange rate (i.e., home currency depreciates by more than 8%) both in the short run and in the long run. O the home currency to appreciate by more than 8% in the short run and then depreciate to its long-run level. the home currency in the short run to overshoot its long-run depreciation of 8% and then appreciate over time to its long-run level. the home currency to depreciate by 8% both in the short run and in the long run.A big Mac costs $3.35 in the U.S. and 31 Pesos in Mexico. The current exchange rate is $1 buys 11 Pesos. Then according to purchasing power parity, we can predict that the U.S. dollar should over time, and in order for ppp to hold we need Et = %3D O appreciate; 10.11 O appreciate; 9.25 O depreciate; 10.11 O depreciate; 9.25
- Consider the balance-of-payments accounting information for Lalaland in 2010 as shown in the table below. All values are in billions of dollars and any variables not provided below have a value of zero. Exports Imports Net foreign-investment income Capital outflows Capital inflows 500 510 - 40 180 90 What is the net change in the stock of Lalaland's investments abroad in 2010? ..... O A. an increase of $30 billion O B. a decrease of $30 billion OC. a decrease of $50 billion O D. an increase of $50 billion O E. insufficient information to determineQUESTION 6 From 1980 to 2000, the dollar-yen exchange rate fell from 240 yen/dollar to 102 yen/dollar, while the pound-dollar exchange rate fell from 2.22 dollars/pound to 1.62 dollars/pound. As a result, O A. the dollar appreciated relative to the yen, but depreciated relative to the pound O B. the dollar depreciated relative to the yen, but appreciated relative to the pound OC. the dollar appreciated relative to both the yen and the pound O D. the dollar depreciated relative to both the yen and the poundCurrently, one Canadian dollar (CAD) is 19 Dirham (the official currency of Maroc). In Canada, you can buy a Big Mac for 6 CAD. If the price of a Big Mac is 125 Dirham in Maroc, which of the following is true according the the theory of Purchasing Power Parity? Relative to the Canadian dollar, the Dirham is currently overvalued. We expect the Dirham to appreciate. O Relative to the Canadian dollar, the Dirham is currently undervalued. We expect the Dirham to depreciate. None of the answers is correct. Relative to the Canadian dollar, the Dirham is currently overvalued. We expect the Dirham to depreciate. Relative to the Canadian dollar, the Dirham is currently undervalued. We expect the Dirham to appreciate.