Question 1

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen, then a __________ exists.

Accepted Answer

When the current exchange rate is lower than the equilibrium rate ($0.0089 < $0.01 for 1 yen), it indicates that dollars are less expensive (or yen are more expensive) than they should be, suggesting a surplus of dollars (people are willing to give more dollars for yen than they ideally should) and a shortage of yen (there's higher demand for yen at this lower price, but not enough yen available at this rate).

Question 2

Which of the following exchange rates between the dollar and the peso would an American buyer of Mexican goods most prefer?

Accepted Answer

The lower the dollar amount equivalent to 1 peso, the more pesos an American buyer can get for their dollars, making Mexican goods cheaper for them. Therefore, $0.04 = 1 peso is the most preferred exchange rate.

Question 3

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will __________ and the yen will __________.

Accepted Answer

The dollar price of a yen will increase as the exchange rate moves from $0.009 to $0.01, indicating the yen is appreciating in value relative to the dollar.

Question 4

Suppose that an American-made pair of pants has a price of $80. If the exchange rate is $0.065 = 1 peso, then a Mexican consumer would have to pay approximately __________ pesos to purchase the pants, but if the exchange rate is $0.055 = 1 peso, then a Mexican consumer would have to pay _________ pesos to purchase the pants.

Accepted Answer

The answer of Suppose that an American-made pair of pants...

Question 5

Suppose a Mexican consumer wants to buy an American television for $700 and an American wants to buy a Mexican raincoat for 800 pesos. If the exchange rate is $0.10 = 1 peso, then the price of the television in pesos will be __________ pesos and the price of the raincoat in dollars will be __________.

Accepted Answer

To convert the price of the television from dollars to pesos, multiply $700 by the exchange rate's inverse (1 peso/$0.10 = 10 pesos/$1), resulting in 700*10 = 7,000 pesos. To convert the price of the raincoat from pesos to dollars, multiply 800 pesos by $0.10/peso, resulting in $80.

Question 6

Suppose that prices in France increase by 8 percent while prices in the United States remain relatively stable. We would expect that (on the foreign exchange market) the demand for U.S. dollars will __________ and the supply of U.S. dollars will __________.

Accepted Answer

The answer of Suppose that prices in France increase by...

Question 7

Suppose that the exchange rate between the U.S. dollar and the Mexican peso is 1 peso = $0.11. If the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is said to have __________ and the dollar to have __________.

Accepted Answer

When the value of the peso decreases from $0.11 to $0.10 in terms of the U.S. dollar, the peso has depreciated (it takes more pesos to buy a dollar). Conversely, the dollar has appreciated because it now buys more pesos than before.

Question 8

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer?

Accepted Answer

When $0.10 equals 1 peso, the peso is stronger relative to the dollar compared to the other options, meaning the Mexican buyer would get more for their money when purchasing American goods.

Question 9

An American computer is priced at $1,350. If the exchange rate between the U.S. dollar and the Mexican peso is $0.057 = 1 peso, approximately how many pesos would a Mexican buyer pay for the computer?

Accepted Answer

To find the cost in pesos, divide the price in dollars by the value of 1 peso in dollars: $1,350 / $0.057 ≈ 23,684 pesos, which is closest to option A, 23,853 pesos.

Question 10

An American computer is priced at $1,350. If the exchange rate between the U.S. dollar and the Japanese yen is $0.009 per yen, the equivalent price of the computer in yen is approximately __________ yen.

Accepted Answer

To find the equivalent price in yen, divide the price in dollars by the value of the dollar in yen: $1,350 / $0.009 = 150,000 yen. The correct answer is D) 149,600, which is a rounding error in the calculation provided. The precise calculation should result in 150,000 yen, but given the options, D) 149,600 is the closest.

Question 11

In a foreign exchange market diagram with pesos per dollar on the vertical axis, the quantity of __________ would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the __________ curve.

Accepted Answer

In a foreign exchange market diagram where pesos per dollar are on the vertical axis, the quantity is typically measured in dollars on the horizontal axis. The U.S. demand for Mexican goods would increase the demand for pesos to pay for these goods, but since the diagram is in pesos per dollar, this demand translates into the supply of dollars to the market, as Americans exchange dollars for pesos.

Question 12

If the average income per U.S. worker decreases while that of Japanese workers remains unchanged, then the demand curve for Japanese yen will shift __________, which will cause the equilibrium exchange rate of the dollar price per yen to __________, which is the same thing as saying that the dollar will __________.

Accepted Answer

The answer of If the average income per U.S. worker...

Question 13

Suppose that prices in the United States rise relative to prices in France. We expect that (on the foreign exchange market) the demand for U.S. dollars will __________ and the supply of dollars will __________.

Accepted Answer

When prices in the United States rise relative to prices in France, it means that U.S. goods have become relatively more expensive compared to French goods. As a result, American exporters will sell fewer products to France, which leads to a decrease in the demand for U.S. dollars on the foreign exchange market. At the same time, French exporters will sell more products to the United States, which creates an increase in the supply of euros. These factors combine to cause a decrease in the demand for U.S. dollars and an increase in the supply of dollars.

Question 14

The U.S. dollar has depreciated relative to the Japanese yen if it takes

Accepted Answer

The answer of The U.S. dollar has depreciated relative to...

Question 15

In a foreign exchange market diagram with dollars per peso on the vertical axis, the quantity of __________ would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the __________ curve.

Accepted Answer

In a foreign exchange market diagram where the vertical axis represents the price of one currency in terms of another (in this case, dollars per peso), the horizontal axis typically represents the quantity of the foreign currency (pesos). The U.S. demand for Mexican goods would increase the demand for pesos to pay for these goods, thus affecting the demand curve.

Question 16

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.007 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will __________, and the yen will __________.

Accepted Answer

Since the current exchange rate of $0.009 is higher than the equilibrium rate of $0.007, it means that the U.S. dollar is overvalued and the Japanese yen is undervalued. Therefore, to bring the exchange rate back to equilibrium, the dollar price of a yen will decrease (since the yen is appreciating) and the yen will appreciate (since it is undervalued). Choice D correctly reflects this relationship.

Question 17

Suppose that prices in Japan increase by 8 percent while prices in the United States remain stable. We would expect that the result would be that in the foreign exchange market ___________________________, ​ceteris paribus​.

Accepted Answer

When prices in Japan increase while prices in the United States remain stable, the value of the yen relative to the dollar decreases because Japanese goods become more expensive compared to American goods. This leads to a decrease in demand for yen and an increase in demand for dollars, causing the dollar to appreciate and the yen to depreciate.

Question 18

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.008 = 1 yen, but currently the exchange rate is $0.007 = 1 yen, then with flexible exchange rates the dollar price of a yen will __________, and the dollar will __________.

Accepted Answer

If the equilibrium exchange rate is $0.008 = 1 yen, but currently the exchange rate is $0.007 = 1 yen, it means that the dollar is weaker than the yen. Therefore, with flexible exchange rates, the dollar price of a yen will increase (the dollar has to buy more yen to reach the equilibrium exchange rate). At the same time, the dollar will depreciate (lose value) because it takes more dollars to buy the same amount of yen. Therefore, the best choice is C (increase; depreciate).

Question 19

The more dollars that must be given up to buy one British pound, the __________ American goods are for the British and the __________ American goods the British will buy; thus __________ dollars will be demanded.

Accepted Answer

The answer of The more dollars that must be given...

Question 20

As the dollar price of the Mexican peso falls, the __________ Mexican goods will be for Americans to purchase and the __________ Mexican goods Americans will buy; thus __________ pesos will be demanded.

Accepted Answer

When the dollar price of the Mexican peso falls, it means that the peso is cheaper in terms of dollars. This makes Mexican goods less expensive for Americans, leading them to buy more Mexican goods. As a result, more pesos will be demanded to facilitate these purchases.

Quiz 34: International Finance

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen, then a __________ exists.

Which of the following exchange rates between the dollar and the peso would an American buyer of Mexican goods most prefer?

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will and the yen will .

Suppose a Mexican consumer wants to buy an American television for $700 and an American wants to buy a Mexican raincoat for 800 pesos. If the exchange rate is $0.10 = 1 peso, then the price of the television in pesos will be pesos and the price of the raincoat in dollars will be .

Suppose that prices in France increase by 8 percent while prices in the United States remain relatively stable. We would expect that (on the foreign exchange market) the demand for U.S. dollars will and the supply of U.S. dollars will .

Suppose that the exchange rate between the U.S. dollar and the Mexican peso is 1 peso = $0.11. If the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is said to have and the dollar to have .

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer?

An American computer is priced at $1,350. If the exchange rate between the U.S. dollar and the Mexican peso is $0.057 = 1 peso, approximately how many pesos would a Mexican buyer pay for the computer?

An American computer is priced at $1,350. If the exchange rate between the U.S. dollar and the Japanese yen is $0.009 per yen, the equivalent price of the computer in yen is approximately __________ yen.

In a foreign exchange market diagram with pesos per dollar on the vertical axis, the quantity of would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the curve.

If the average income per U.S. worker decreases while that of Japanese workers remains unchanged, then the demand curve for Japanese yen will shift , which will cause the equilibrium exchange rate of the dollar price per yen to , which is the same thing as saying that the dollar will __.

Suppose that prices in the United States rise relative to prices in France. We expect that (on the foreign exchange market) the demand for U.S. dollars will and the supply of dollars will .

The U.S. dollar has depreciated relative to the Japanese yen if it takes

In a foreign exchange market diagram with dollars per peso on the vertical axis, the quantity of would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the curve.

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.007 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will , and the yen will .

Suppose that prices in Japan increase by 8 percent while prices in the United States remain stable. We would expect that the result would be that in the foreign exchange market ___________________________, ceteris paribus.

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.008 = 1 yen, but currently the exchange rate is $0.007 = 1 yen, then with flexible exchange rates the dollar price of a yen will , and the dollar will .

The more dollars that must be given up to buy one British pound, the American goods are for the British and the American goods the British will buy; thus __ dollars will be demanded.

As the dollar price of the Mexican peso falls, the Mexican goods will be for Americans to purchase and the Mexican goods Americans will buy; thus __ pesos will be demanded.

Quiz 34: International Finance

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen but currently the exchange rate is $0.0089 = 1 yen, then a __________ exists.

Which of the following exchange rates between the dollar and the peso would an American buyer of Mexican goods most prefer?

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will __________ and the yen will __________.

Suppose that prices in France increase by 8 percent while prices in the United States remain relatively stable. We would expect that (on the foreign exchange market) the demand for U.S. dollars will __________ and the supply of U.S. dollars will __________.

Suppose that the exchange rate between the U.S. dollar and the Mexican peso is 1 peso = $0.11. If the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is said to have __________ and the dollar to have __________.

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer?

An American computer is priced at $1,350. If the exchange rate between the U.S. dollar and the Mexican peso is $0.057 = 1 peso, approximately how many pesos would a Mexican buyer pay for the computer?

An American computer is priced at $1,350. If the exchange rate between the U.S. dollar and the Japanese yen is $0.009 per yen, the equivalent price of the computer in yen is approximately __________ yen.

In a foreign exchange market diagram with pesos per dollar on the vertical axis, the quantity of __________ would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the __________ curve.

Suppose that prices in the United States rise relative to prices in France. We expect that (on the foreign exchange market) the demand for U.S. dollars will __________ and the supply of dollars will __________.

The U.S. dollar has depreciated relative to the Japanese yen if it takes

In a foreign exchange market diagram with dollars per peso on the vertical axis, the quantity of __________ would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the __________ curve.

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.007 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will __________, and the yen will __________.

Suppose that prices in Japan increase by 8 percent while prices in the United States remain stable. We would expect that the result would be that in the foreign exchange market ___________________________, ​ceteris paribus​.

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.008 = 1 yen, but currently the exchange rate is $0.007 = 1 yen, then with flexible exchange rates the dollar price of a yen will __________, and the dollar will __________.

The more dollars that must be given up to buy one British pound, the __________ American goods are for the British and the __________ American goods the British will buy; thus __________ dollars will be demanded.

As the dollar price of the Mexican peso falls, the __________ Mexican goods will be for Americans to purchase and the __________ Mexican goods Americans will buy; thus __________ pesos will be demanded.

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.01 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will and the yen will .

Suppose that prices in France increase by 8 percent while prices in the United States remain relatively stable. We would expect that (on the foreign exchange market) the demand for U.S. dollars will and the supply of U.S. dollars will .

Suppose that the exchange rate between the U.S. dollar and the Mexican peso is 1 peso = $0.11. If the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is said to have and the dollar to have .

In a foreign exchange market diagram with pesos per dollar on the vertical axis, the quantity of would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the curve.

Suppose that prices in the United States rise relative to prices in France. We expect that (on the foreign exchange market) the demand for U.S. dollars will and the supply of dollars will .

In a foreign exchange market diagram with dollars per peso on the vertical axis, the quantity of would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the curve.

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.007 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will , and the yen will .

Suppose that prices in Japan increase by 8 percent while prices in the United States remain stable. We would expect that the result would be that in the foreign exchange market ___________________________, ceteris paribus.

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.008 = 1 yen, but currently the exchange rate is $0.007 = 1 yen, then with flexible exchange rates the dollar price of a yen will , and the dollar will .

The more dollars that must be given up to buy one British pound, the American goods are for the British and the American goods the British will buy; thus __ dollars will be demanded.

As the dollar price of the Mexican peso falls, the Mexican goods will be for Americans to purchase and the Mexican goods Americans will buy; thus __ pesos will be demanded.