Exam 18: International Macroeconomics

The Canadian dollar is a floating currency. If the exchange rate for the Canadian dollar changes from US$0.95 to US$0.98, the Canadian dollar has appreciated.

If the dollar value of the pound falls, then the dollar has depreciated.

Which group would supply euros in the foreign exchange market? I. Americans who want to buy U.S. goods, services, and assets II) Americans who want to buy European goods, services, and assets III) Europeans who want to buy U.S. goods, services, and assets

Scenario: Gizmovia The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40. At the target rate of $0.50:

A fixed exchange rate: I. leaves monetary policy available for domestic stabilization. II) is less expensive to maintain than a floating exchange rate.

When the interest rate in the United States increases as a result of contractionary monetary policy, investment spending _____ and consumption _____ .

In the foreign exchange market, an increase in the rate of return available in the eurozone, all other things equal, will shift the _____ curve for the _____ to the _____, and the euro will _____.

Suppose that the yen falls from ¥800 to ¥1,200 to the dollar and the price level in Japan increases by 50% but there is no change in the price level in the United States. Which statement is TRUE?

A fixed exchange rate: I. leaves monetary policy available for domestic stabilization. II) reduces the uncertainty of international trade.

Use the following to answer questions: -(Figure: Exchange Market Intervention) Refer to panel (b) in Figure: Exchange Market Intervention. Which approach could the Genovian government use to decrease the value of the geno below its present equilibrium exchange rate and into the target range?

A current account surplus occurs when:

Scenario: Gizmovia II The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.75. At the target rate of $0.50:

With a floating exchange rate:

Foreign exchange controls are systems of a common currency used by a group of countries, such as the Asian Tigers.

After a revaluation, all other things equal, a country's balance of payments on the current account will likely increase.

A depreciation of a currency below the exchange rate fixed by its government CANNOT be countered by:

Use the following to answer questions: -(Figure: International Capital Flows) Refer to Figure: International Capital Flows. At an interest rate of 4%, the quantity of loanable funds demanded by British borrowers is _____ the quantity of loanable funds supplied by British lenders.

Why did China add $2 trillion to its foreign exchange reserves between early 2009 and early 2014?

Scenario: Gizmovia The Republic of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current exchange rate for the gizmo is $0.40. If Gizmovia uses monetary policy to bring the exchange rate for the gizmo to $0.50, it should _____ interest rates by _____ the money supply.

All other things unchanged, a decrease in the value of the dollar against the euro _____ U.S. net exports and shifts the aggregate demand curve to the _____.