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- 1. Multiple ChoiceThe more valuable currency hasdepreciatedappreciateddepletedamortizes
- 2. Multiple ChoiceWhen a country's currency appreciates, its exports ____doublebecome cheaperbecome more expensiveDrop by at least 1/2
- 3. Multiple ChoiceDifference between sale of assets to foreigners and purchases of assets from foreigners is called_____financial accountexchange accountinternational tradecurrent account
- 4. Multiple ChoiceA country's ____ accounts are a summary of their transactions with other countriesExchangeBalance of paymentIncome statementline of credit
- 5. Multiple ChoiceThe price of one nation's currency expressed in terms of another's currency is calledworld priceexchange ratepurchasing power parityterms of trade
- 6. Multiple Choice
What is a 'Fixed Exchange Rate'
the government/central bank entirely or predominantly determines the exchange rate.
the forex market entirely or predominantly determines the exchange rate.
the trading partners entirely or predominantly determines the exchange rate.
the importing countries entirely or predominantly determines the rate.
- 7. Multiple Choice
A floating exchange rate is a regime where the currency price is set by the
forex market based on demand for the currency compared with other currencies.
forex market based on supply and demand compared with other currencies.
central banking authority
the country who is trading with our country
- 8. Multiple Choice
What is the difference between a fixed and a floating exchange rate?
A fixed exchange rate is set by the monetary authority with respect to a foreign currency or a basket of foreign currencies, a floating exchange rate is determined in foreign exchange markets depending on demand and supply, and it generally fluctuates constantly.
There is no difference between them, both determined by the central bank.
A fixed exchange rate is better than the floating exchange rate in determining the exchange rate of a particular country's currency.
All of the answers above.
- 9. Multiple Choiceif 1 $ = Rs. 50, and if rises to 1 $ = Rs. 60 it will be calledappreciationdepreciationrevaluationall the above
- 10. Multiple ChoiceIf 1 $ = Rs. 50 and now it becomes 1 $ = Rs 40 it will be calledDepreciationappreciationdevaluationnone of the above
- 11. Multiple Choice
The graph shows a(n)
depreciation of the dollar and appreciation of the Euro.
appreciation of the dollar and depreciation of the Euro.
appreciation of the dollar and appreciation of the Euro.
depreciation of the dollar and depreciation of the Euro.
- 12. Multiple Choice
The shift in the graph could be caused by
an increase in the Supply of Euros.
an increase in the Demand for Euros.
a decrease in the Supply of Euros.
the crowding out effect.
- 13. Multiple Choice
The shift in the graph could be caused by
an increase in the Supply of dollars.
deflation in Europe.
people in Europe become wealthier.
inflation in the US.
European companies launch new popular products.
- 14. Multiple Choice
The shift in the graph could be caused by
interest rates rising in Mexico.
an increase in American tariffs.
speculators demanding more pesos.
the launch of a popular product by an American company.
inflation in the US.
- 15. Multiple Choice
All of the following could cause the shift in the graphs for the Japanese Yen and US Dollar except:
an increase in interest rates in the US.
the release of hot new video game console by Japanese producer Nintendo.
speculators desiring Japanese currency.
inflation in the US.
an increase in GDP in the US.
- 16. Multiple Choice
What could cause the shift in the graphs for the Japanese Yen and US Dollar?
deflation in the US.
inflation in Japan.
Japanese company Sony creates a holographic TV system.
a decrease in Japenese interest rates.
an increase in the Japanese GDP.
- 17. Multiple Choice
The shift in the graph would cause
a US trade deficit.
an increase in American tariffs.
speculators demanding more pesos.
an appreciation of the dollar.
inflation in the US.
- 18. Multiple Choice
An increase in interest rates in the US would cause
D for the $ to increase and D for the Real to increase
D for the $ to increase and S for the Real to increase.
S for the $ to increase and D for the Real to increase.
S for the $ to increase and S for the Real to increase.
- 19. Multiple Choice
A recession in the US would cause
D for the $ to increase and D for the Real to increase
D for the $ to increase and S for the Real to increase.
S for the $ to increase and D for the Real to increase.
S for the $ to increase and S for the Real to increase.
- 20. Multiple Choice
Speculators for-see a future increase in the Brazilian GDP we would expect
D for the $ to increase and D for the Real to increase
D for the $ to increase and S for the Real to increase.
S for the $ to increase and D for the Real to increase.
S for the $ to increase and S for the Real to increase.
- 21. Multiple Choice
Brazilians decide to travel in massive tours at Orlando area theme parks, we expect the following in the ForEx market
D for the $ to increase and D for the Real to increase
D for the $ to increase and S for the Real to increase.
S for the $ to increase and D for the Real to increase.
S for the $ to increase and S for the Real to increase.
- 22. Multiple Choice
Massive inflation strikes the US, we expect
D for the $ to increase and D for the Real to increase
D for the $ to increase and S for the Real to increase.
S for the $ to increase and D for the Real to increase.
S for the $ to increase and S for the Real to increase.
- 23. Multiple Choice
A large increase in the value of real estate occurs in Brazil making Brazilians feel wealthier. We expect
D for the $ to increase and D for the Real to increase
D for the $ to increase and S for the Real to increase.
S for the $ to increase and D for the Real to increase.
S for the $ to increase and S for the Real to increase.
- 24. Multiple Choice
Real incomes rise in the US, we expect
D for the $ to increase and D for the Real to increase
D for the $ to increase and S for the Real to increase.
S for the $ to increase and D for the Real to increase.
S for the $ to increase and S for the Real to increase.
- 25. Multiple ChoiceWill the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
The U.S. increase imports of tractor wheels from Canada.current account; debit.current account; credit.capital account; debit.capital account; credit. - 26. Multiple ChoiceWill the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
A Ukrainian businesswoman buys a majority share of ownership in a U.S. clothing company.current account; debit.current account; credit.capital account; debit.capital account; credit. - 27. Multiple ChoiceWill the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
An American working in Saudi Arabia sends his wife, who lives in Atlanta, money so she can buy a new car.current account; debit.current account; credit.capital account; debit.capital account; credit. - 28. Multiple ChoiceWill the following scenario affect the current account or capital account, and will the transaction be a debit or credit?
An American receives quarterly dividend payments (profits) from stock she owns in a German company.current account; debit.current account; credit.capital account; debit.capital account; credit. - 29. Multiple ChoiceAn increase in price level in the U.S. relative it its trading partners will cause the U.S. dollar to __________ on the foreign exchange market, and Americans will __________ the purchase of foreign made goods.appreciate, increaseappreciate, decreasedepreciate, decreasedepreciate, increase
- 30. Multiple ChoiceIf Americans want to purchase more South Korean cars, the supply of dollars in the foreign exchange market will __________ and demand for the Won, the South Korean currency, will __________.increase, decreaseincrease, increasedecrease, decreasedecrease, increase
- 31. Multiple ChoiceAn increase in stock market profits in Europe will cause the dollar to ______________ and the euro, the currency of the European Union, to __________.depreciate, depreciatedepreciate, appreciateappreciate, appreciateappreciate, depreciate
- 32. Multiple ChoiceAn increase in US deficit spending will cause a(n) __________ in domestic U.S. business investment and a(n) __________ of the U.S. dollar in foreign exchange markets.increase, appreciationdecrease, depreciationdecrease, appreciationincrease, depreciation
- 33. Multiple ChoiceThe sale of U.S. treasury bonds on the open market will cause a(n) __________ in the U.S. price level and a(n) __________ of the U.S. dollar in the foreign exchange market.decrease, appreciationdecrease, depreciationincrease, appreciationincrease, depreciation
- 34. Multiple ChoiceImports involveGoods in, money in, positive in Current AccountGoods in, money out, negative in Current AccountGoods in, money in, positive in Financial AccountGoods in, money out, negative in Financial Account
- 35. Multiple ChoiceExports involveGoods out, money out, positive in Current AccountGoods out, money in, positive in Current AccountGoods out, money in, positive in Financial AccountGoods out, money out, negative in Current Account
- 36. Multiple ChoiceFinancial Account transactions include items such asImportsExportsTransfers & RemittancesPurchase and sale of stocks and bonds
- 37. Multiple ChoiceCurrency depreciation could be caused bySupply Increase or Demand IncreaseSupply Increase or Demand DecreaseSupply Decrease or Demand DecreaseSupply Decrease or Demand Increase
- 38. Multiple ChoiceCurrency appreciation could be caused bySupply Increase or Demand IncreaseSupply Increase or Demand DecreaseSupply Decrease or Demand DecreaseSupply Decrease or Demand Increase
- 39. Multiple ChoiceCurrency appreciation results inIncreased exports, increased importsDecreased exports, decreased importsIncreased exports, decreased importsDecreased exports, increased imports
- 40. Multiple ChoiceCurrency depreciation results inIncreased exports, increased importsDecreased exports, decreased importsIncreased exports, decreased importsDecreased exports, increased imports
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