Relative inflation rates affect interest rates, exchange rates, the overall economic health of a country, and the operations and profitability of multinational companies. Consider the following statement: Countries with lower inflation rates will have lower interest rates.   If companies borrow from countries with low interest rates, the potential gains from the interest savings will likely be (multiplied or offset) by the

Which of the following creates a supply of Japanese yen in foreign exchange markets? Multiple Choice A Canadian student purchases a new Japanese car. A Canadian goes on a business trip to Japan. A Japanese company sells an insurance policy to a Canadian citizen. A Japanese tourist takes a trip to the Canadian Rockies. A Japanese investor receives dividends on some Canadian stock,

Based on the table, which of these currency devaluations would result in the largest proportional impact on purchasing power?   A Brazilian currency drop of 0.1% in value against American currency for Brazilian consumers. An American currency drop of 0.1% in value against Japanese currency for American consumers. A Thai currency drop of 0.1% in value against Brazilian currency for Thai consumers. A Mexican currency drop of 0.1% in value against Thai currency for Mexican consumers.

If the U.S. Dollar appreciates, foreigners will find American goods more expensive because they have to spend less for those goods in USD, meaning with higher prices, the number of U.S. goods being exported will likely drop and leads to a reduction in the Gross Domestic Product (GDP). True or False

You work for the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce. Your supervisor gives you the following U.S. International Transactions Accounts for the Year 20XX (figures are in billions of dollars) and wants it reported in a coherent fashion in accordance with accepted conventions: Investment income payments $24; Export of goods $456; Balance of services $57; U.S purchases of foreign assets were $147.; Imports of goods $589; Change in Official Reserves $15; Investment income receipts $28; Foreign purchases of U.S. assets were $230; Net unliteral transfers were ($32). ($32) means -$32. a)- He wants you to compute the balances of trade, current account, capital account and statistical discrepancy. b)- He also wants you to find out (based on your calculation) if the U.S. is a net debtor or a net creditor. Explain

Suppose the foreign exchange market is characterized by the following equations: Qd  = 12.5 – 1.25R Qs  = 3.5 + 1.25R where  Qd  is the demand function for foreign exchange,  Qs  is supply function of foreign exchange, and  R  is exchange rate in units of domestic currency per unit of foreign currency (quantity is in million units of foreign currency). ===================== The foreign exchange market described above is Select one: stable unstable unpredictable none of the above

U S foreign exchange intervention is sometimes done by an Excha U.S. foreign exchange intervention is sometimes done by an Exchange Stabilization Fund, or ESF (a branch of the Treasury Department), which manages a portfolio of U.S. government and foreign currency bonds. An ESF intervention to support the yen, for example, would take the form of a portfolio shift out of dollar and into yen assets. Show that ESF interventions are automatically sterilized and thus do not alter money supplies. How do ESF operations affect the foreign exchange risk premium? U S foreign exchange intervention is sometimes done by an Excha

As the domestic price level falls domestic citizens will import less and direct spending to relatively cheaper domestic goods. Foreigners may also purchase more exports. Overall this will improve the trade balance and increasing aggregate demand. This phenomenon is known as     the wealth effect     the exchange rate effect     the interest rate effect     the liquidity effect

The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's currency. Suppose the following table presents nominal exchange rate data for June 13, 2019, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow. Foreign Currency Brazilian real (BRL) Canadian dollar (CAD) Euro (EUR) Japanese yen (JPY) Mexican peso (MXN) United Kingdom pound (GBP) Cost of One Unit of Foreign Currency (Dollars) 0.4755 0.8666 1.2151 0.008538 0.0942 1.7552 Suppose that on June 13, 2019, an antique woven rug handmade in the United Kingdom is priced at GBP 570. The approximate U.S. dollar price of the rug would be If the nominal exchange rate for the U.S. dollar-Mexican peso falls from $0.0942 to $0.07065 per Mexican peso, the Mexican peso value, or " relative to the U.S. dollar. in

To prevent an appreciation of the British pound, the U.S. Federal Reserve has to: Sell U.S. currency Buy British currency Sell British currency Devalue the U.S. dollar