Question 1

With time, a depreciation in the value of a nation's currency in the foreign market will cause the nation's

Accepted Answer

A depreciation in a nation's currency makes its goods and services cheaper for foreign buyers, leading to an increase in exports. Conversely, foreign goods become more expensive for domestic consumers, leading to a decline in imports.

Question 2

Under a system of flexible exchange rates, which of the following would be most likely to cause a nation's currency to appreciate on the foreign exchange market?

Accepted Answer

If a nation has stable domestic prices while its trading partners are experiencing inflation, its goods and services become relatively cheaper, increasing demand for its currency and causing it to appreciate.

Question 3

Under a system of flexible exchange rates, transactions that increase the supply of the nation's currency to the foreign exchange market will cause the nation's

Accepted Answer

According to the basic principles of supply and demand, an increase in the supply of a currency will cause its value to depreciate in relation to other currencies. As a result, goods and services produced in the country will become less expensive for foreign consumers, which may encourage greater demand for those products and potentially help to reduce the country's trade deficit.

Question 4

Under a system of flexible exchange rates, which of the following will cause the nation's currency to depreciate in the exchange market?

Accepted Answer

A higher inflation rate in the domestic economy than in its trading partners makes the nation's goods more expensive compared to its trading partners. Hence, there will be a decrease in demand for the nation's goods and services, which leads to a depreciation of the nation's currency.

Question 5

If restrictive monetary policy results in a slowdown in the domestic inflation rate and higher real interest rates, other things constant, the

Accepted Answer

When a nation implements a restrictive monetary policy, it can cause a slowdown in the domestic inflation rate and higher real interest rates. These actions can make the domestic currency more attractive to foreign investors due to the higher interest rates. As a result, the demand for the domestic currency increases, causing it to appreciate.

Question 6

If a German student pays her way to attend Harvard University, her actions will

Accepted Answer

When the German student pays her way to attend Harvard University, she will need to exchange her Euros for U.S. dollars. This creates a supply of Euros and a demand for dollars in the foreign currency market, which will likely lead to an appreciation of the U.S. dollar and a depreciation of the Euro.

Question 7

If the exchange rate between the U.S. dollar and the Japanese yen were such that one U.S. dollar equals 100 yen, what would be the price in dollars of a Japanese automobile that cost 2,000,000 yen?

Accepted Answer

Since 1 U.S. dollar equals 100 yen, we can divide the price of the automobile by 100 to convert it to dollars. 
2,000,000 yen ÷ 100 = $20,000. Therefore, the price of the Japanese automobile in dollars is $20,000.

Question 8

Suppose the dollar rises from 100 to 125 yen. As a result,

Accepted Answer

When the dollar rises from 100 to 125 yen, it means the dollar has appreciated against the yen. This makes Japanese goods cheaper for American consumers, likely increasing imports from Japan.

Question 9

Suppose a student group from your university tours the United Kingdom. As they purchase English goods, their actions will

Accepted Answer

When the student group purchases English goods, they will need to exchange their U.S. dollars for English pounds. This creates a demand for English pounds and a supply of U.S. dollars in the foreign exchange market. Thus, the value of the English pound will increase relative to the U.S. dollar.

Question 10

Which of the following would be most likely to cause an appreciation of the dollar relative to foreign currencies?

Accepted Answer

When domestic interest rates are higher, foreign investors will be more likely to invest in that country, which increases the demand for that country's currency, consequently leading to an appreciation of that currency relative to foreign currencies.

Question 11

Which of the following would most likely cause a nation's currency to depreciate?

Accepted Answer

An increase in a nation's domestic inflation rate would most likely cause its currency to depreciate because the higher inflation rate decreases the purchasing power of the currency, making it less attractive to foreign investors and traders. This leads to a decrease in demand for the currency, causing its value to decline in the foreign exchange market.

Question 12

Other things constant, which of the following will most likely cause the dollar to appreciate on the exchange rate market?

Accepted Answer

Higher interest rates in the U.S. attract foreign capital, increasing demand for the dollar. A low inflation rate in the U.S. makes U.S. goods more competitive, increasing demand for the dollar. High income growth in Europe can increase demand for U.S. exports, also increasing demand for the dollar.

Question 13

Under a flexible exchange system, which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Accepted Answer

When a nation's inflation rate decreases in comparison to other countries, its goods and services become relatively less expensive and attractive to foreigners, leading to an increase in demand for its currency and thus appreciation in value.

Question 14

Which of the following would most likely cause a nation's currency to depreciate?

Accepted Answer

An increase in inflation rate will reduce the purchasing power of the currency, making it less valuable compared to other currencies in the foreign exchange market, leading to depreciation.

Question 15

Use the figure below to answer the following question(s). Figure 18-2 In Figure 18-2, which of the following would cause the American demand for foreign exchange (pounds) to shift from D₁ to D₂?

Accepted Answer

The answer of Use the figure below to answer the...

Question 16

If income in the United States increases more rapidly than the income of our trading partners, other things constant, the dollar will

Accepted Answer

The answer of If income in the United States increases...

Question 17

Which of the following would be likely to cause a nation's currency to depreciate?

Accepted Answer

When foreign interest rates are higher than domestic interest rates, foreign investors will shift their investments to that country, causing an increase in demand for the foreign currency and a decrease in demand for the domestic currency, leading to a depreciation in value.

Question 18

Use the figure below to answer the following question(s). Figure 18-2 Figure 18-2 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. Which of the following would cause the demand for foreign exchange (pounds) to shift from D₁ to D₂?

Accepted Answer

The answer of Use the figure below to answer the...

Question 19

Which of the following would most likely cause a nation's currency to appreciate?

Accepted Answer

An increase in inflation of the nation's trading partners can make the nation's goods relatively cheaper, increasing demand for its currency and causing it to appreciate.

Question 20

Under a flexible exchange rate system, which of the following will be most likely to cause a depreciation in the exchange rate value of the dollar (relative to the English pound)?

Accepted Answer

Lower real interest rates in the United States make U.S. investments less attractive to foreign investors, causing a decrease in demand for U.S. dollars and, consequently, a depreciation in the exchange rate value of the dollar relative to the English pound.

Quiz 19: International Finance and the Foreign Exchange Market

With time, a depreciation in the value of a nation's currency in the foreign market will cause the nation's

Under a system of flexible exchange rates, which of the following would be most likely to cause a nation's currency to appreciate on the foreign exchange market?

Under a system of flexible exchange rates, transactions that increase the supply of the nation's currency to the foreign exchange market will cause the nation's

Under a system of flexible exchange rates, which of the following will cause the nation's currency to depreciate in the exchange market?

If restrictive monetary policy results in a slowdown in the domestic inflation rate and higher real interest rates, other things constant, the

If a German student pays her way to attend Harvard University, her actions will

If the exchange rate between the U.S. dollar and the Japanese yen were such that one U.S. dollar equals 100 yen, what would be the price in dollars of a Japanese automobile that cost 2,000,000 yen?

Suppose the dollar rises from 100 to 125 yen. As a result,

Suppose a student group from your university tours the United Kingdom. As they purchase English goods, their actions will

Which of the following would be most likely to cause an appreciation of the dollar relative to foreign currencies?

Which of the following would most likely cause a nation's currency to depreciate?

Other things constant, which of the following will most likely cause the dollar to appreciate on the exchange rate market?

Under a flexible exchange system, which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Which of the following would most likely cause a nation's currency to depreciate?

Use the figure below to answer the following question(s) . Figure 18-2 In Figure 18-2, which of the following would cause the American demand for foreign exchange (pounds) to shift from D₁ to D₂?

If income in the United States increases more rapidly than the income of our trading partners, other things constant, the dollar will

Which of the following would be likely to cause a nation's currency to depreciate?

Use the figure below to answer the following question(s) . Figure 18-2 Figure 18-2 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. Which of the following would cause the demand for foreign exchange (pounds) to shift from D₁ to D₂?

Which of the following would most likely cause a nation's currency to appreciate?

Under a flexible exchange rate system, which of the following will be most likely to cause a depreciation in the exchange rate value of the dollar (relative to the English pound) ?

Quiz 19: International Finance and the Foreign Exchange Market

With time, a depreciation in the value of a nation's currency in the foreign market will cause the nation's

Under a system of flexible exchange rates, which of the following would be most likely to cause a nation's currency to appreciate on the foreign exchange market?

Under a system of flexible exchange rates, transactions that increase the supply of the nation's currency to the foreign exchange market will cause the nation's

Under a system of flexible exchange rates, which of the following will cause the nation's currency to depreciate in the exchange market?

If restrictive monetary policy results in a slowdown in the domestic inflation rate and higher real interest rates, other things constant, the

If a German student pays her way to attend Harvard University, her actions will

If the exchange rate between the U.S. dollar and the Japanese yen were such that one U.S. dollar equals 100 yen, what would be the price in dollars of a Japanese automobile that cost 2,000,000 yen?

Suppose the dollar rises from 100 to 125 yen. As a result,

Suppose a student group from your university tours the United Kingdom. As they purchase English goods, their actions will

Which of the following would be most likely to cause an appreciation of the dollar relative to foreign currencies?

Which of the following would most likely cause a nation's currency to depreciate?

Other things constant, which of the following will most likely cause the dollar to appreciate on the exchange rate market?

Under a flexible exchange system, which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market?

Which of the following would most likely cause a nation's currency to depreciate?

Use the figure below to answer the following question(s) . Figure 18-2 In Figure 18-2, which of the following would cause the American demand for foreign exchange (pounds) to shift from D1 to D2?

If income in the United States increases more rapidly than the income of our trading partners, other things constant, the dollar will

Which of the following would be likely to cause a nation's currency to depreciate?

Use the figure below to answer the following question(s) . Figure 18-2 Figure 18-2 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. Which of the following would cause the demand for foreign exchange (pounds) to shift from D1 to D2?

Which of the following would most likely cause a nation's currency to appreciate?

Under a flexible exchange rate system, which of the following will be most likely to cause a depreciation in the exchange rate value of the dollar (relative to the English pound) ?

Use the figure below to answer the following question(s) . Figure 18-2 In Figure 18-2, which of the following would cause the American demand for foreign exchange (pounds) to shift from D₁ to D₂?

Use the figure below to answer the following question(s) . Figure 18-2 Figure 18-2 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. Which of the following would cause the demand for foreign exchange (pounds) to shift from D₁ to D₂?