Recently the British Pound suffered an unexpected depreciation in value. Which of the following actions being considered by Coventry Furniture of London, a purely domestic furniture manufacturer and retailer (based in the UK), would be considered a highly unlikely response to the depreciation of the pound? Coventry might try to raise domestic prices because competing imports are now priced higher in England. Coventry might try to lower domestic prices because competing imports are now priced lower in England. Coventry might choose to maintain its domestic sales prices constant in pound terms. None of these actions are a highly unlikely response.

4. In Canada, the Ontario government provides a tax incentive for firms that spend on scientific research. This tax credit will most likely: a. help increase TFP in Ontario b. reduce spending on research and development (R&D) c. increase convergence among Canada's provinces d. reduce the likelihood of diminishing marginal returns

Do you think that a U.S. firm can experience political risk problems in its overseas projects because of the U.S. government?

Which of the following is true? A large increase in the income level in Singapore along with no growth in the U.S. income level is normally expected to cause (assuming no change in interest rates or other factors) an increase in Singapore demand for U.S. goods, and the Singapore dollar should depreciate. If inflation in Australia suddenly increased while U.S. inflation stayed the same, there would be an outward shift in the demand schedule for AU$ and an inward shift in the supply schedule for AU$. (AU$ stands for the Australian dollar.) For a U.S. speculator, when expecting a foreign currency to depreciate, a possible way to speculate on this movement is to borrow dollars, convert the proceeds to the foreign currency, lend in the foreign country, and use the proceeds from this investment to repay the dollar loan. The main effect of interest rate movements on exchange rates is through their effect on international trade.