Question 1

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if interest rates decrease in Europe.

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 2

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if inflation decreases in Europe.

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 3

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if interest rates increase in the U.S.

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 4

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if inflation increases in the U.S.

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 5

When supply decreases while demand of a domestic currency simultaneously increases, that currency tends to:

Accepted Answer

When supply of a currency decreases and demand for it increases, the value of the currency appreciates because there are fewer units of the currency available for more buyers, driving up its value.

Question 6

(Figure: Generalized Exchange Rate Model) In the figure, if the domestic currency is at point D, its supply increases, and demand decreases, the domestic currency will move to point:

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 7

(Figure: Generalized Exchange Rate Model) In the figure, if the domestic currency is at point B, its supply decreases, and demand increases, the domestic currency will move to point:

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 8

(Figure: Generalized Exchange Rate Model) In the figure, if the yen is the domestic currency and interest rates fall in Japan, the yen will move from point D to point:

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 9

(Figure: Generalized Exchange Rate Model) In the figure, if the yen is the domestic currency and interest rates rise in Japan, the yen will move from point B to point:

Accepted Answer

The answer of (Figure: Generalized Exchange Rate Model) In the...

Question 10

When exchange rates are expressed as their reciprocals, _____ reversed.

Accepted Answer

When exchange rates are expressed as their reciprocals, the numerator and denominator are reversed. This is a mathematical operation and does not directly affect supply and demand, currency risk, or equilibrium in the context of exchange rates.

Question 11

When the numerator and denominator in a currency pair are reversed, the exchange rate is expressed:

Accepted Answer

When the numerator and denominator in a currency pair are reversed, the exchange rate is expressed as its reciprocal. This is because the rate now shows how much of the original numerator currency is equivalent to one unit of the original denominator currency, essentially flipping the original exchange rate.

Question 12

To calculate payments in an alternative currency:

Accepted Answer

To calculate payments in an alternative currency, you multiply the currency being swapped by the exchange rate or its reciprocal, depending on the direction of the conversion. This method accurately reflects the value of one currency in terms of another at the current exchange rate.

Question 13

Mandy is visiting Japan and wants to purchase a pair of earrings. They are priced at 14,000 yen, and one U.S dollar is equal to 111 yen. If Mandy converts her U.S. dollars into yen, she will need about ____ dollars to pay for the earrings.

Accepted Answer

To find out how many U.S. dollars Mandy needs, divide the price in yen by the exchange rate: 14,000 yen / 111 yen per dollar = approximately $126.

Question 14

Gunther is visiting Japan and wants to purchase a set of Japanese knives. They are priced at 24,000 yen, and one euro is equal to 129 yen. If Gunther converts his euros into yen, he will need about ____ euros to pay for the knives.

Accepted Answer

To find out how many euros Gunther needs to pay for the knives, divide the price in yen by the conversion rate: 24,000 yen / 129 yen/euro ≈ 186 euros.

Question 15

Aimi is visiting the United States and wants to purchase some Indian pottery from Arizona. The pottery is priced at $36.00. If $1 is equal to ¥111, Aimi will need about:

Accepted Answer

$36.00 x 111 = ¥4,000

Question 16

Gaspard is visiting the United States, and his hotel bill for one week is $1,500. The hotel insists on being paid in U.S. dollars. Gaspard will need to convert _____ euros into dollars to pay the bill because €1 equals $1.16.

Accepted Answer

To find out how many euros Gaspard needs to convert, divide the total bill in dollars by the exchange rate: $1,500 / $1.16 = approximately €1,291.

Question 17

Aaron is visiting Europe and wishes to take a tour of southern Italy for €2,000. If the exchange rate is USD/EUR .86, Aaron will need to exchange about _____ dollars for euros to pay for the tour.

Accepted Answer

To find out how many dollars Aaron needs, divide the cost in euros by the exchange rate: €2,000 / 0.86 = $2,325.58. Therefore, Aaron will need to exchange approximately $2,325.

Question 18

Assume that EUR/USD 1.16. A $36 shirt would cost _____ euros, and a €20 hat would be _____ dollars.

Accepted Answer

$36 shirt would cost 36/1.16 = 31 euros, and a €20 hat would be 20*1.16 = 23 dollars.

Question 19

Assume that EUR/YEN 129. A ¥6,470 shirt would cost about _____ euros, and a €20 hat would be about _____ yen.

Accepted Answer

To convert ¥6,470 to euros, divide by the exchange rate: 6470 / 129 ≈ 50 euros. To convert €20 to yen, multiply by the exchange rate: 20 * 129 = 2580 yen.

Question 20

Assume that USD/YEN 111. A ¥6,470 shirt would cost about _____ dollars, and a $30 hat would be about _____ yen.

Accepted Answer

To convert ¥6,470 to dollars, divide by the exchange rate: 6470 / 111 ≈ 58. To convert $30 to yen, multiply by the exchange rate: 30 * 111 = 3330, which is approximately 3,350 when rounded to the nearest ten as in the options provided.

Quiz 32: Foreign Exchange Markets

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if interest rates decrease in Europe.

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if inflation decreases in Europe.

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if interest rates increase in the U.S.

(Figure: Generalized Exchange Rate Model) In the figure, movement from _____ occurs if inflation increases in the U.S.

When supply decreases while demand of a domestic currency simultaneously increases, that currency tends to:

(Figure: Generalized Exchange Rate Model) In the figure, if the domestic currency is at point D, its supply increases, and demand decreases, the domestic currency will move to point:

(Figure: Generalized Exchange Rate Model) In the figure, if the domestic currency is at point B, its supply decreases, and demand increases, the domestic currency will move to point:

(Figure: Generalized Exchange Rate Model) In the figure, if the yen is the domestic currency and interest rates fall in Japan, the yen will move from point D to point:

(Figure: Generalized Exchange Rate Model) In the figure, if the yen is the domestic currency and interest rates rise in Japan, the yen will move from point B to point:

When exchange rates are expressed as their reciprocals, _____ reversed.

When the numerator and denominator in a currency pair are reversed, the exchange rate is expressed:

To calculate payments in an alternative currency:

Mandy is visiting Japan and wants to purchase a pair of earrings. They are priced at 14,000 yen, and one U.S dollar is equal to 111 yen. If Mandy converts her U.S. dollars into yen, she will need about ____ dollars to pay for the earrings.

Gunther is visiting Japan and wants to purchase a set of Japanese knives. They are priced at 24,000 yen, and one euro is equal to 129 yen. If Gunther converts his euros into yen, he will need about ____ euros to pay for the knives.

Aimi is visiting the United States and wants to purchase some Indian pottery from Arizona. The pottery is priced at $36.00. If $1 is equal to ¥111, Aimi will need about:

Gaspard is visiting the United States, and his hotel bill for one week is $1,500. The hotel insists on being paid in U.S. dollars. Gaspard will need to convert _____ euros into dollars to pay the bill because €1 equals $1.16.

Aaron is visiting Europe and wishes to take a tour of southern Italy for €2,000. If the exchange rate is USD/EUR .86, Aaron will need to exchange about _____ dollars for euros to pay for the tour.

Assume that EUR/USD 1.16. A $36 shirt would cost _ euros, and a €20 hat would be _ dollars.

Assume that EUR/YEN 129. A ¥6,470 shirt would cost about _ euros, and a €20 hat would be about _ yen.

Assume that USD/YEN 111. A ¥6,470 shirt would cost about _ dollars, and a $30 hat would be about _ yen.