Exam 10: Understanding Foreign Exchange

The United States has a balance of payments surplus with Europe. We would therefore expect the supply of euros to be __________ the demand for euros. Consequently, the euro should __________.

Which of the following countries did not adopt the euro as their currency?

Anything that causes the United States to buy fewer foreign goods shifts the foreign currency __________ curve to the __________.

Which of the following statements is incorrect?

With a deficit in our balance of payments, there is an excess __________ dollars in the foreign exchange market, causing the dollar to __________.

A rise in foreign productivity tends to __________ foreign prices and causes the dollar to __________ relative to the foreign currency.

Suppose that one-year Treasury bills yield 5 percent in the United States and 6 percent in France. Investors will prefer the U.S. securities if they expect the dollar to __________ against the euro over the next year.

If the price of a Swiss franc is $0.60, the price of a dollar is __________ Swiss francs.

Anything that causes the United States to buy more foreign goods shifts the foreign currency __________ curve to the __________.

The equilibrium price for a British pound is $1.60. At a price of $1.75 per British pound, there would be excess __________ the dollar and the dollar would __________.

A sudden expectation of future depreciation of the dollar causes funds to flow __________ the United States and the dollar to actually __________.

Which of the following factors does not affect the long-run supply and demand conditions of foreign currencies?

A decrease in German Treasury interest rates, all else held constant, causes a leftward shift in the __________ euros and causes the dollar to __________ against the euro.

With a surplus in our balance of payments, there is an excess __________ dollars in the foreign exchange market, causing the dollar to __________.

We would expect the euro to appreciate when there is a __________ shift in the euro demand curve or a __________ shift in the euro supply curve.

A self-correcting mechanism tending to bring a country's balance of payments into equilibrium exists under __________ exchange rate systems.

A __________ in the balance of payments means that we are paying out more money abroad than we are taking in, resulting in a(n)__________ of foreign exchange value relative to the dollar.

The more we pay for a euro, the __________ European goods are to us and the __________ European assets are to us.

South Africa is a major wine producer. As Americans become more familiar with those wines and show an increased preference for them, an increased __________ the South African rand will cause the dollar to __________ relative to the rand.

Suppose that one-year treasury bills yield 8 percent in the United States and 6 percent in Japan. Investors will prefer to purchase the U.S. securities, unless they expect the dollar to __________ against the yen over the next year.