Question 1

On May 12, 2011, it cost U.S.$1.44 to buy one euro.How many euros would U.S.$1 buy?

Accepted Answer

To find out how many euros U.S.$1 can buy, we need to divide 1 by the exchange rate of U.S.$1.44 per euro. So, 1 ÷ 1.44 = 0.69. Therefore, U.S.$1 can buy 0.69 euros.

Question 2

The Big Mac index is a measure of how well the purchasing power parity theory works.

Accepted Answer

The Big Mac index is a tool for determining whether currencies are over or undervalued based on the price of a Big Mac in different countries. This is an application of the purchasing power parity theory, which suggests that in the long run, exchange rates between countries should adjust to reflect differences in price levels. Thus, the Big Mac index is a test of the purchasing power parity theory.

Question 3

One disadvantage of the gold standard was that no nation had control of its domestic monetary policies.

Accepted Answer

Under the gold standard, a country's money supply was tied to the amount of gold it held. This meant that a country could not adjust its money supply to stimulate its economy or address other domestic issues without affecting its gold reserves and potentially destabilizing the entire system.

Question 4

If the dollar depreciates, it can be said that

Accepted Answer

When the dollar depreciates, it means its value has decreased relative to other currencies, making those other currencies appreciate in comparison.

Question 5

Appreciation is the term used to describe

Accepted Answer

The answer of Appreciation is the term used to describe
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Question 6

From the beginning of 2007, the value of the U.S.dollar

Accepted Answer

From the beginning of 2007, the U.S. dollar experienced a sharp drop against major currencies, including the euro, the British pound, and the Japanese yen. This was partly due to concerns over the U.S. subprime mortgage crisis and its potential impact on the broader economy.

Question 7

Is it possible for a currency to appreciate relative to one currency, and depreciate relative to another?

Accepted Answer

This is possible in a world of floating exchange rates where a currency can appreciate against one currency while depreciating against another. The value of currencies in such a system is determined by market forces of supply and demand and can fluctuate freely.

Question 8

There is an exchange rate between

Accepted Answer

There is an exchange rate between every pair of currencies. This allows for currency conversion in international trade and investment.

Question 9

The exchange rate

Accepted Answer

The exchange rate represents the price of one currency in terms of another currency. It is the value at which one currency can be exchanged for another currency. Therefore, option C is the correct choice. Option A is incorrect as the exchange rate doesn't involve comparing the GDPs of two different countries. Option B is also incorrect as it is not a precise definition of exchange rate. Option D is not correct because absolute advantage refers to a country's ability to produce a good or service at a lower cost than other countries. It is not directly related to the exchange rate.

Question 10

On May 12, 2011, it cost U.S.$.04 to buy one Russian ruble.How many Russian rubles would U.S.$1 buy?

Accepted Answer

If $0.04 buys 1 ruble, then $1 would buy 1 / 0.04 = 25 rubles.

Question 11

At any given moment there is one exchange rate

Accepted Answer

There is a specific exchange rate between every pair of currencies, reflecting the value of one currency in terms of another. This rate fluctuates based on market conditions, supply and demand, and economic indicators.

Question 12

On May 12, 2011, it cost U.S.$1.64 to buy one British pound.How many British pounds would U.S.$1 buy?

Accepted Answer

To find out how many British pounds U.S.$1 would buy, we need to divide 1 by 1.64 (the cost of one British pound in U.S. dollars). This gives us 0.6097, which rounds to 0.61. Therefore, the answer is choice B.

Question 13

On May 12, 2011 the U.S.dollar was worth 0.70 euros.How many dollars did it take to buy one euro?

Accepted Answer

To find the number of dollars needed to buy one euro, we need to divide 1 by 0.70 (since one euro is worth 0.70 dollars). This gives us 1.43, so it took 1.43 dollars to buy one euro. Therefore, the best choice is B) 1.43.

Question 14

The exchange rate is

Accepted Answer

The exchange rate is the price of one currency in terms of another currency. It represents the rate at which one currency can be exchanged for another. A currency's exchange rate is influenced by a variety of economic and political factors, such as inflation rates, interest rates, and geopolitical events.

Question 15

In 2007, the value of the U.S.dollar

Accepted Answer

In 2007, the U.S. dollar decreased relative to the euro. This means that it took more U.S. dollars to buy one euro.

Question 16

On May 12, 2011, the U.S.dollar was worth 28 Russian rubles.How many U.S.dollars did it take to buy one Russian ruble?

Accepted Answer

To find out how many U.S. dollars it takes to buy one Russian ruble, you take the reciprocal of the given exchange rate. If 1 USD = 28 RUB, then 1 RUB = 1/28 USD, which is approximately 0.04 USD.

Question 17

On May 12, 2011, the U.S.dollar was worth 0.61 British pounds.How many dollars did it take to buy one British pound?

Accepted Answer

To find out how many dollars it takes to buy one British pound, you take the reciprocal of the given exchange rate. If 1 USD = 0.61 GBP, then 1 GBP = 1/0.61 USD, which is approximately 1.64 USD.

Question 18

If the dollar appreciates, it can be said that

Accepted Answer

When the dollar appreciates, it means that its value increases relative to other currencies. As a result, each dollar can buy more of the foreign currency than before, indicating that other currencies have depreciated in comparison.

Question 19

The purchasing power parity theory of exchange rate determination holds that the exchange rate between any two national currencies is fixed to reflect differences in the price levels in the two countries.

Accepted Answer

The purchasing power parity theory suggests that exchange rates adjust to equalize the price of identical goods and services in different countries, not that they are fixed.

Question 20

When goods or services cross international borders

Accepted Answer

When goods or services cross international borders, payment must generally move in the opposite direction. This is typically accomplished through currency exchange. The importing country pays for the goods or services in its own currency, which is then exchanged for the exporting country's currency to complete the transaction.

Quiz 36: The International Monetary System: Order or Disorder