U.S. firms involved in international trade have to a. ignore U.S. inflation and ignore value of the dollar relative to foreign currencies. b. ignore U.S. inflation and guess value of the dollar relative to foreign currencies. c. International transactions are not affected by inflation or foreign exchange. d. anticipate U.S. inflation and guess value of the dollar relative to foreign currencies. e. anticipate U.S. inflation and ignore value of the dollar relative to foreign currencies.

What effect would a devaluation of a country's currency most likely have on its export volumes? A. Export volumes would decrease, as goods become more expensive in foreign markets. B. Export volumes would increase, as goods become cheaper in foreign markets. C. Export volumes would remain unchanged, as currency value does not affect trade. D. Export volumes would initially decrease, but then increase over time due to adjustments in trade agreements.

Topics 6.2-6.5 New Currency Problems. Each of the determinants is used once. 1. Residents and businesses of the US are asked to boycott goods made in Iran due to political tensions between the two countries. Besides oil, the US receives plastics, iron, fruits and vegetables, salt, and copper from Iran. Graph the Dollar and Iranian Rial markets as a result of the boycott. What happens to future US exports to Iran after the currency values change? 2. Assume that the US does go into a mild recession. Assume that the Euro zone avoids a similar recession and continues its growth rate. Graph the Dollar and Euro markets. From the US perspective.

If the exchange rate moves from $1 for one Euro to $1.50 for one Euro, then Select one: a. it becomes more expensive for a European to buy a European product. b. it becomes more expensive for an American investor to save at an American bank. c. it becomes more expensive for an American to buy a Mexican product. d. it becomes more expensive for an American to buy a European product.

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

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Due to the increase in the productivity of Omanis in the technology sector, the rate of exports of technological services has increased. How will this affect the value of the Omani Rial and the US dollar? a. Stronger rial and weaker dollar b. weaker rial and stronger dollar С. both currencies will increase in value d. the increase will be cancelled out by each other