Exam 17: The Foreign Exchange Market

If the dollar appreciates from 1.5 Brazilian reals per dollar to 2.0 reals per dollar,the real depreciates from ________ per real to ________ per real.

Everything else held constant,when a country's currency depreciates,its goods abroad become ________ expensive while foreign goods in that country become ________ expensive.

When the effects of the global financial crisis started to spread more quickly throughout the rest of the world,the U.S.dollar ________ because demand for U.S.assets ________.

An increase in productivity in a country will cause its currency to ________ because it can produce goods at a ________ price,everything else held constant.

Explain the law of one price and the theory of purchasing power parity.Why doesn't purchasing power parity explain all exchange rate movements? What factors determine long-run exchange rates?

If the U.S.dollar appreciates from 1.25 Swiss franc per U.S.dollar to 1.5 francs per dollar,then the franc depreciates from ________ U.S.dollars per franc to ________ U.S.dollars per franc.

Higher tariffs and quotas cause a country's currency to ________ in the ________ run,everything else held constant.

________ in the expected future domestic exchange rate causes the demand for domestic assets to shift to the ________ and the domestic currency to appreciate,everything else held constant.

A decrease in the domestic interest rate causes the demand for domestic assets to shift to the ________ and the domestic currency to ________,everything else held constant.

If the interest rate on euro-denominated assets is 13 percent and it is 15 percent on peso-denominated assets,and if the euro is expected to appreciate at a 4 percent rate,for Francois the Frenchman the expected rate of return on peso-denominated assets is

The theory of PPP suggests that if one country's price level falls relative to another's,its currency should

________ in the expected future domestic exchange rate causes the demand for domestic assets to shift to the ________ and the domestic currency to depreciate,everything else held constant.

A decrease in the expected future domestic exchange rate causes the demand for domestic assets to shift to the ________ and the domestic currency to ________,everything else held constant.

The exchange rate is

Everything else held constant,when a country's currency appreciates,the country's goods abroad become ________ expensive and foreign goods in that country become ________ expensive.

If the dollar depreciates relative to the Swiss franc

The theory of PPP suggests that if one country's price level rises relative to another's,its currency should

When the value of the dollar changes from £0.75 to £0.5,then the British pound has ________ and the U.S.dollar has ________.

If the interest rate on euro-denominated assets is 13 percent and it is 15 percent on peso-denominated assets,and if the euro is expected to appreciate at a 4 percent rate,for Manuel the Mexican the expected rate of return on euro-denominated assets is

On January 25,2009,one U.S.dollar traded on the foreign exchange market for about 49.0 Indian rupees.Thus,one Indian rupee would have purchased about ________ U.S.dollars.