between the U.S. dollar and the Polish zloty is the number of dollars required to buy a single zloty. O a. balance of payments identity O b. currency depreciation O c. exchange rate O d. price equation O e. marginal product of currency The

What does it mean to describe the foreign-exchange market as an "over-the-counter market"? O A. The market consists of customers buying and selling in the foreign-exchange market directly. O B. The market consists of market makers linked together by computers. OC. The market consists of customers linked together by computers. O D. The market is a physical place where currencies are traded.

As the value of the American dollar increases relative to the Mexican peso, we expect that international demand for American corn output relative to Mexican corn may а. increase decrease b. stay the same as international corn demand is independent of the exchange rates С. we cannot tell Od.

In the foreign exchange market, an increase in the U.S. interest rate leads to in the exchange rate because the supply of dollars a fall; increases O b. no change; does not change Ос a rise; decreases O d. a rise; increases O . a fall; decreases

Identify each transaction by whether it belongs in the US current account or financial account: An American professor buys a laptop computer from a firm in Taiwan. O Financial Account O Current Account

Under standard assumptions, in the short run, currency devaluation causes a country's output to O rise. O fall. O remain unchanged.

QUESTION 2 In the long run, an increase in the nominal exchange rate is likely to lead to Note: Multiple answers are possible. O A. an increase in exports ) B. a decrease in exports C. an increase in imports D. a decrease in imports

What does interest rate parity refer to? Inflation rates in all countries are identical O a. O b. Real exchange rates in all countries are identical None of the answers is correct O d. Nominal interest rates in all countries are identical

The Federal reserve can directly intervene in the foreign exchange markets by: a. lowering interest rates. O b. exchanging dollars for foreign currency. O c. imposing barriers on international trade O d. increasing the inflation rate. CLEAR MY CHOICE

If the forecast UK inflation rate is 5% and the forecast European inflation rate is 2% and the spot exchange rate is €1.20/£1. Then according to relative PPP which of the following statements is correct? Select one: a. O b. The euro is forecast to appreciate by 3% to approximately €1.236/£1 O c. The pound is forecast to depreciate by 3% to approximately €1.1650/£1 O d. The euro is forecast to depreciate by 3% to approximately €1.1650/£1 The pound is forecast to appreciate by 3% to approximately €1.236/£1