Question 1

If the quantity supplied of euro were greater than the quantity demanded,then the price of the

Accepted Answer

If the quantity supplied of euro were greater than the quantity demanded, there would be a surplus of euro in the market. In order to get rid of the surplus, sellers would have to lower the price of euro in order to entice buyers. As a result, the price of euro would fall.

Question 2

If the quantity of euro demanded were greater than the quantity supplied,then the price of the

Accepted Answer

If the quantity of euro demanded is greater than the quantity supplied, there would be a shortage of euros in the market. This would cause the price to increase as buyers would bid up the price in order to acquire the limited supply of euros.

Question 3

Who among the following is most likely to favor an appreciation of the U.S.dollar?

Accepted Answer

The answer of Who among the following is most likely...

Question 4

If a currency increases in value in response to market forces,this process is known as

Accepted Answer

Appreciation refers to the increase in value of a currency in response to market forces. Reflation refers to a policy of increasing government spending and lowering taxes to stimulate economic growth. Revaluation refers to a deliberate change in the exchange rate of a country's currency. Value-added refers to the increase in value of a product or service during production.

Question 5

On June 3,2005,it cost 1.22 U.S.dollars to buy one euro.How many euros did it take to buy one U.S.dollar?

Accepted Answer

To find how many euros it takes to buy one U.S. dollar, we need to take the reciprocal of the given exchange rate (since the given rate is in terms of dollars per euro). 
Reciprocal of 1.22 = 0.8197, which is approximately 0.82 euros. Therefore, the answer is A) 0.82 euros.

Question 6

If a currency decreases in value in response to market forces,this process is known as

Accepted Answer

Depreciation refers to the decrease in value of a currency in response to market forces, such as changes in supply and demand. Devaluation, on the other hand, is a deliberate decision by a government to reduce the value of its currency in relation to other currencies. Deflation refers to a general decrease in the level of prices of goods and services in an economy. Degeneration is not a term used in economics to describe currency value.

Question 7

Can the U.S.dollar and the European euro both appreciate relative to each other?

Accepted Answer

In a floating exchange rate system, if one currency appreciates relative to another, the other must depreciate. The value of currencies is relative, so they cannot both appreciate against each other at the same time.

Question 8

If a currency increases in value as a result of government decree rather than market forces,the process is known as

Accepted Answer

If a currency increases in value as a result of government decree rather than market forces, the process is known as revaluation. Reflation is the opposite of deflation and refers to a period of increasing economic activity and inflation. Appreciation refers to an increase in value due to market forces such as supply and demand, while value-added refers to the increase in value of a product or service as a result of additional processing or refinement.

Question 9

The supply of euros would come from

Accepted Answer

European demand for U.S. government bonds would result in an inflow of dollars into Europe, which would then need to be exchanged for euros. This would increase the supply of euros. The other choices are unrelated to the supply of euros.

Question 10

Exchange rates determined by the forces of demand and supply are called

Accepted Answer

Floating exchange rates are determined by the market forces of supply and demand, where the currency value is allowed to fluctuate freely in response to changes in these factors. Fixed exchange rates, by contrast, are set by governments or monetary authorities and typically involve a commitment to maintaining a certain exchange rate by intervening in the foreign exchange market. Equilibrium exchange rates refer to the exchange rate at which the quantity of currency demanded equals the quantity supplied, and can be influenced by a variety of economic factors such as inflation, interest rates, and economic growth. Dirty exchange rates refer to exchange rate systems that combine elements of both fixed and floating exchange rates, allowing for some degree of exchange rate flexibility while also providing a level of government intervention in the market.

Question 11

Americans needing foreign currencies get those currencies from a bank.The ultimate source of these currencies is

Accepted Answer

U.S. exports to foreign countries generate foreign currencies because foreign buyers pay for U.S. goods and services in their local currencies, which then become available to Americans through banks.

Question 12

If the dollar appreciates relative to other currencies,which of the following is true?

Accepted Answer

When the dollar appreciates relative to other currencies, it becomes stronger, meaning that more of the foreign currency is needed to buy the same amount of dollars. This does not mean it takes more dollars to buy foreign currencies (which would be a depreciation of the dollar), nor does it directly lead to an increase in U.S. exports or foreign purchases of U.S. goods; in fact, it often makes U.S. goods more expensive abroad, potentially reducing exports and foreign purchases of U.S. goods.

Question 13

If a currency decreases in value as a result of government decree rather than market forces,the process is known as

Accepted Answer

When a government deliberately lowers the value of its currency, it is known as devaluation. This can be achieved by reducing the official exchange rate or by increasing the domestic money supply. Depreciation, on the other hand, is a decrease in the value of a currency due to market forces such as supply and demand. Deflation refers to a general decrease in prices and the purchasing power of money, while degeneration is not a recognized term in economics.

Question 14

If market forces change the exchange rate value of one dollar from 80 yen to 83.25 yen,then the dollar has

Accepted Answer

When the exchange rate value of one dollar increases from 80 yen to 83.25 yen, it means that one dollar can now buy more yen than before. This indicates that the dollar has appreciated in value relative to the yen.

Question 15

On May 11,2011,it cost 11.601 Mexican pesos to buy one U.S.dollar.How many U.S.dollars did it take to buy a Mexican peso?

Accepted Answer

To find how many U.S. dollars it takes to buy one Mexican peso, we need to take the reciprocal of the given exchange rate. Therefore, 1/11.601 ≈ 0.0862, which means it takes $0.0862 to buy one Mexican peso. Rounded to two decimal places, this is equivalent to $0.09.

Question 16

The rate at which one currency is traded for another is called a(n)

Accepted Answer

The exchange rate refers to the rate at which one currency can be exchanged for another. It is the price of one currency in terms of another currency. The other options are incorrect as the prime rate refers to the interest rate charged by banks, the trade rate is not a commonly used term in finance, and the money rate is too broad of a term to refer to the specific exchange rate between currencies.

Question 17

Which of the following companies would gain from foreign currency depreciation?

Accepted Answer

The answer of Which of the following companies would gain...

Question 18

The currency value of Agraria is set by government decree.Which of the following happens when the government alters the exchange rate so that its currency can buy more units of foreign currency?

Accepted Answer

The answer of The currency value of Agraria is set...

Question 19

The demand for euros would come from

Accepted Answer

The answer of The demand for euros would come from
...

Question 20

Why does anyone demand foreign currency?

Accepted Answer

All of the given options can lead to a demand for foreign currency.

A) International trade in goods and services requires payment in the local currency of the exporting country. This means that the importing country needs to exchange their local currency for the foreign currency of the exporting country to make the payment.

B) International trade in financial assets such as stocks, bonds, and derivatives also require the exchange of currencies. Investors buy assets denominated in foreign currency, which means they need to exchange their local currency for the foreign currency to purchase the asset.

C) Purchases of physical assets overseas such as real estate, machinery, and equipment also require foreign currency as payment. The buyer needs to exchange their local currency for the foreign currency of the country where the asset is located.

Quiz 19: The International Monetary System Order Or Disorder