Question 1

In the foreign exchange market,an increase in the supply of dollars could be the result of

Accepted Answer

The answer of In the foreign exchange market,an increase in...

Question 2

The figure above shows supply curves of Australian dollars in the foreign exchange market.
-Based on the figure above,which of the following factors could lead the supply curve to shift leftward from S₀ to S₁?

Accepted Answer

The answer of  
The figure above shows supply curves...

Question 3

When the Australian interest rate differential ________,the demand for dollars ________ and the demand curve for dollars shifts rightward.

Accepted Answer

When the Australian interest rate differential rises, the return on Australian deposits increases relative to deposits denominated in other currencies, making them more attractive to foreign investors. As a result, the demand for Australian dollars increases, causing the demand curve for dollars to shift rightward.

Question 4

If the Australian interest rate differential decreases,then in the foreign exchange market the

Accepted Answer

The answer of If the Australian interest rate differential decreases,then...

Question 5

Suppose interest rates in foreign countries increase relative to the Australian interest rate.As a result,there is ________ the demand curve for dollars.

Accepted Answer

When interest rates increase in foreign countries relative to the Australian interest rate, investors will seek higher returns on their investments in those foreign countries. This means they will need to convert their Australian dollars to the currency where they will invest, decreasing the demand for Australian dollars, and causing a leftward shift of the demand curve for dollars.

Question 6

If the Australian interest rate differential decreases,then in the foreign exchange market the

Accepted Answer

If the Australian interest rate differential decreases, it means that the potential return on investments in Australia decreases relative to other countries. This makes the Australian dollar less attractive to foreign investors, leading to a decrease in the demand for it. As a result, the supply of Australian dollars increases in the foreign exchange market.

Question 7

If the equilibrium exchange rate is 80 yen per Australian dollar and currently the exchange rate is 70 yen per Australian dollar,then there is a ________ of dollars that leads to ________.

Accepted Answer

There is a shortage of dollars because the current exchange rate is below the equilibrium rate, leading to upward pressure on the exchange rate.

Question 8

If the expected future exchange rate decreases,then the supply of dollars ________ and the demand for dollars ________.

Accepted Answer

The answer of If the expected future exchange rate decreases,then...

Question 9

If the Australian interest rate rises relative to the interest rate in other countries,then the supply of dollars ________ and the demand for dollars ________.

Accepted Answer

When the Australian interest rate rises relative to interest rate in other countries, it becomes more attractive to hold Australian dollars as they offer a higher return. This increased demand for Australian dollars leads to a decrease in the supply of Australian dollars on the foreign exchange market, which causes the exchange rate to appreciate. Therefore, the demand for dollars (in this case, Australian dollars) increases, while the supply of dollars decreases.

Question 10

The equilibrium exchange rate is 70 yen per Australian dollar.At this exchange rate,the quantity demanded equals the quantity supplied and is $1.3 billion a day.If the exchange rate is now 60 yen per Australian dollar,then

Accepted Answer

At an exchange rate of 60 yen per Australian dollar, which is below the equilibrium rate of 70 yen, the demand for Australian dollars will exceed the supply, creating a shortage. This shortage will put upward pressure on the exchange rate, causing it to rise towards equilibrium.

Question 11

In the foreign exchange market,which of the following shifts the supply curve of dollars leftward?

Accepted Answer

When the expected future exchange rate rises, people expect the dollar to be stronger in the future, leading them to hold onto dollars now, reducing the current supply of dollars in the market.

Question 12

If the interest rate rises in Australia relative to other nations,then in the foreign exchange market the demand for dollars ________ and the supply of dollars ________.

Accepted Answer

When interest rates rise in Australia relative to other nations, foreign investors are more likely to invest in Australia to take advantage of higher returns, increasing the demand for Australian dollars. Simultaneously, Australians are less likely to invest abroad, decreasing the supply of Australian dollars in the foreign exchange market.

Question 13

The figure above shows supply curves of Australian dollars in the foreign exchange market.
-Refer to the figure above.The supply curve shifts rightward from S₀ to S₂ when the Australian interest rate ________ and foreign interest rates are unchanged.The supply curve shifts rightward from S₀ to S₂ when the expected future exchange rate ________.

Accepted Answer

The answer of  
The figure above shows supply curves...

Question 14

The ________ the expected future exchange rate,the greater is the expected profit from holding dollars,and so the ________.

Accepted Answer

When the expected future exchange rate is higher, the expected profit from holding dollars increases, leading to an increase in demand for dollars, shifting the demand curve rightward.

Question 15

If people expect the future exchange rate for dollars will be lower,then in the foreign exchange market the current

Accepted Answer

If people expect the future exchange rate for dollars will be lower, they will be less likely to want to hold onto dollars, meaning there will be a decrease in demand for dollars in the foreign exchange market.

Question 16

In the foreign exchange market,which of the following shifts the demand curve for dollars rightward?

Accepted Answer

An increase in the expected future exchange rate implies that the dollar is expected to appreciate in the future, making it more valuable relative to other currencies. This, in turn, would increase the demand for dollars, causing a rightward shift in the demand curve. The other options would shift the demand curve for dollars leftward.

Question 17

The equilibrium exchange rate is 70 yen per Australian dollar.At this exchange rate,the quantity demanded equals the quantity supplied and is $1.3 billion a day.If the exchange rate is now 80 yen per Australian dollar,then

Accepted Answer

When the exchange rate increases to 80 yen per Australian dollar, it becomes more expensive for those holding yen to buy Australian dollars, leading to a decrease in the quantity demanded of Australian dollars. Conversely, Australians find it more attractive to exchange their dollars for yen, increasing the quantity supplied of Australian dollars. This mismatch creates a surplus of Australian dollars, putting downward pressure on the exchange rate, causing it to fall.

Question 18

The figure above shows supply curves of Australian dollars in the foreign exchange market.
-Based on the figure above,which of the following factors could lead the supply curve to shift rightward from S₀ to S₂?

Accepted Answer

The answer of  
The figure above shows supply curves...

Question 19

The ________ the expected future exchange rate,the greater is the expected profit from holding dollars and so the ________.

Accepted Answer

As the expected future exchange rate increases, the demand for dollars increases, which leads to an increase in the supply of dollars, shifting the supply curve of dollars leftward. Therefore, the correct option is D.

Question 20

The figure above shows supply curves of Australian dollars in the foreign exchange market.
-Based on the figure above,which of the following factors could lead the supply curve to shift leftward from S₀ to S₁?

Accepted Answer

A fall in foreign interest rates could lead to a decrease in the supply of Australian dollars in the foreign exchange market, as foreign investors may choose to invest their funds elsewhere with higher interest rates. This would shift the supply curve leftward from S₀ to S₁. None of the other options would cause a leftward shift in the supply curve.

Quiz 17: International Finance

In the foreign exchange market,an increase in the supply of dollars could be the result of

The figure above shows supply curves of Australian dollars in the foreign exchange market. -Based on the figure above,which of the following factors could lead the supply curve to shift leftward from S₀ to S₁?

When the Australian interest rate differential ,the demand for dollars and the demand curve for dollars shifts rightward.

If the Australian interest rate differential decreases,then in the foreign exchange market the

Suppose interest rates in foreign countries increase relative to the Australian interest rate.As a result,there is ________ the demand curve for dollars.

If the Australian interest rate differential decreases,then in the foreign exchange market the

If the equilibrium exchange rate is 80 yen per Australian dollar and currently the exchange rate is 70 yen per Australian dollar,then there is a of dollars that leads to .

If the expected future exchange rate decreases,then the supply of dollars and the demand for dollars .

If the Australian interest rate rises relative to the interest rate in other countries,then the supply of dollars and the demand for dollars .

The equilibrium exchange rate is 70 yen per Australian dollar.At this exchange rate,the quantity demanded equals the quantity supplied and is $1.3 billion a day.If the exchange rate is now 60 yen per Australian dollar,then

In the foreign exchange market,which of the following shifts the supply curve of dollars leftward?

If the interest rate rises in Australia relative to other nations,then in the foreign exchange market the demand for dollars and the supply of dollars .

The the expected future exchange rate,the greater is the expected profit from holding dollars,and so the .

If people expect the future exchange rate for dollars will be lower,then in the foreign exchange market the current

In the foreign exchange market,which of the following shifts the demand curve for dollars rightward?

The equilibrium exchange rate is 70 yen per Australian dollar.At this exchange rate,the quantity demanded equals the quantity supplied and is $1.3 billion a day.If the exchange rate is now 80 yen per Australian dollar,then

The figure above shows supply curves of Australian dollars in the foreign exchange market. -Based on the figure above,which of the following factors could lead the supply curve to shift rightward from S₀ to S₂?

The the expected future exchange rate,the greater is the expected profit from holding dollars and so the .

The figure above shows supply curves of Australian dollars in the foreign exchange market. -Based on the figure above,which of the following factors could lead the supply curve to shift leftward from S₀ to S₁?