Which of the following gives rise to transaction demand for a currency?   A Chinese investor buys U.S. T-bonds, expecting dollars to appreciate.   The Bank of Japan sells yen in the foreign currency markets.   A Japanese car maker pays a U.S. engine manufacturer in dollars.

The third box is the same as the first box(increase or decrease). The fourth box is the same as the second box(demand or supply).

There is trade between the U.S. (domestic country) and Great Britain (foreign country) and the quantity of pounds supplied is positively related to the exchange rate. The exchange rate is defined as the domestic currency price of the foreign currency, i.e., dollars per pound. Using clearly labeled graphs of demand for and supply of the foreign currency, show and explain what will happen to: (i) the demand for pounds and/or; (ii) the supply of pounds; and (iii) the value of the dollar against the pound as a result of each one of the following changes. (a) a decrease in tariffs in the Great Britain. (b) a decrease in prices of goods produced in China. Both the U.S. and Great Britain trade with China. (c) a decrease in interest rates in the U.S

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

21. What does Foreign Exchange mean? Why do we see currency fluctuations?

Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange rate at 1 riyal per euro, as shown by the grey line on the following graph. Refer to the following graph when answering the questions that follow. EXCHANGE RATE (Riyal per euro) 4.0 3.5 3.0 1.5 1.0 0.5 0 0 4 Supply of Euros Demand for Euros 8 12 16 20 QUANTITY OF EUROS (Billions) 24 28 32 At the official riyal price of euros, there is a At the official exchange rate of 1 riyal per euro, the euro is pay and the Saudi riyal is ▼ for European exports than they would with a free-floating exchange rate. of euros in the foreign exchange market. , which means that Saudis Suppose the governments in the Eurozone and Saudi Arabia agree to change the official exchange rate from 1 riyal per euro to 2 riyal per euro. The action represents a of the euro and a of the riyal.

If a dollar can buy 98 Japanese yen and a British pound costs $1.50, how many yen would it take to buy £1? If a pound of copper costs £1 in Britain, ¥1,600 per pound in Tokyo, and $1.45 per pound in the United States, where is a pound of copper most expensive and where is it least expensive?

Use the table below to answer the next two questions. You will need to fill in the blanks. Currency South African Rand Singapore Dollar Swiss Franc Euro Danish Krone Foreign Currency to 1$ = U.S. Dollars $0.14 1.30 0.72 $1.01 $0.19 Which of the following below ranks the currencies from most valuable to least valuable? Rand, Singapore Dollar; Franc; Euro; Krone; U.S. Dollar Rand; Krone; Singapore Dollar; U.S. Dollar; Franc; Euro Krone: Dand: Euro: US Dollar: Singapore Dollar Franc

What is the effect of a devaluation of a domestic currency?     A) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will decrease.   B) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will decrease.   C) Domestic goods will become cheaper in terms of foreign currency, and consequently exports will increase.   D) Domestic goods will become more expensive in terms of foreign currency, and consequently exports will increase.

Find the U.S. dollar value of each of the following currencies at the given exchange rates: a. $1=C$.96(Canadian dollars) b.$1= 81 yen (Japanese Yen) c. $1=A$.95(Australian dollars) d. $1= SKR 6 (Swedish kronor) e. $1=SF .90 (Swiss francs)