The supply of U.S. dollars on foreign exchange markets is Answer 1. derived from the supply of U.S. goods. 2. derived from the demand by United States for imported goods and services. 3. determined directly by open market operations at the Federal Reserve Bank. 4. derived from the demand for U.S. products by foreigners.

The supply of U.S. dollars on foreign exchange markets is Answer 1. derived from the supply of U.S. goods. 2. derived from the demand by United States for imported goods and services. 3. determined directly by open market operations at the Federal Reserve Bank. 4. derived from the demand for U.S. products by foreigners.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Currencies and currencies cannot be the subject of foreign exchange transactions by confronting supply with demand in the foreign exchange market. Select one:true False
A. Canada produces natural resources (coal, natural gas, and others), the demand for which has increased rapidly as China and other emerging economies expand. i. Explain how growth in the demand for Canada's natural resources would affect the demand for Canadian dollars in the foreign exchange market. Explain how the supply of Canadian dollars would change. ii. iii. Explain how the value of the Canadian dollar would change. iv. Illustrate your answer with a graphical analysis. 1
Explain the relationship between the interest rate and the exchange rate in a country. Explain in terms of capital flows between countries and show what happens to a country's currency value in terms of another country's currency when interest rates differ between two countries. Explain as clearly as possible using country A and country B as your example.
If the exchange rate between the US Dollar ($) and the Euro (E) goes from being $7/E to $6/E, we say that the US Dollar has __________ relative to the Euro. a) appreciated b) arbitraged c) stagnated d) depreciated
Suppose Argentina gets inflation under control and the Argentine inflation rate decreases substantially. What would likely happen to the demand for Argentine pesos, the supply of Argentine pesos, and the peso/U.S. dollar exchange rate?
Currency traders expect the value of the U.S. dollars to fall by yearend. What effect will this have on the demand and supply of dollars in the foreign exchange market? Support your answer.
Suppose that the U.S. dollar appreciates against the Japanese Yen. What will occur as a result? purchasing power parity will begin to hold U.S. exports to Japan will become cheaper and increase, imports from Japan to the U.S. will become more expensive and decline U.S. currency becomes over-valued relative to Japanese currency U.S. exports to Japan will become more expensive and decline, imports from Japan to the U.S. will become cheaper and increase
If the Japanese yen appreciates against the U.S. dollar: Answer 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
Country A’s goods have become relatively more expensive for Country B’s buyers due to a change in the exchange rate between those two country’s currencies. All other things remaining constant, this could be because Country B’s currency has __________ relative to Country A’s currency. a) depreciated b) shifted c) stagnated d) appreciated
If the European euro were to depreciate relative to the U.S. dollar in the foreign exchange market, would it be easier or harder for the French to sell their wine in the United States? Suppose you were planning a trip to Paris. How would depreciation of the euro change the dollar cost of your trip?
An appreciation of the exchange value of the U.S. dollar would: A) increase the dollar prices of U.S. imports and the foreign cost of exports from the U.S. B) decrease the dollar prices of U.S. imports and the foreign cost of exports from the U.S. C) increase the dollar prices of U.S. imports, but decrease the foreign cost of exports from the U.S. D) decrease the dollar prices of U.S. imports, but increase the foreign cost of exports from the U.S.
If the exchange rate between the US Dollar ($) and the Euro (E) goes from being $5/E to $6/E, we say that the US Dollar has __________ relative to the Euro. a) depreciated b) stagnated c) appreciated d) arbitraged