Exam 34: International Finance

Suppose a Mexican consumer wants to buy an American television for $700 and an American wants to buy a Mexican raincoat for 800 pesos. If the exchange rate is $0.10 = 1 peso, then the price of the television in pesos will be __________ pesos and the price of the raincoat in dollars will be __________.

If the U.S. dollar appreciates in the foreign exchange market, U.S. exports will be __________ and U.S. imports will be __________.

Exhibit 34-4 ​ -Refer to Exhibit 34-4. Under a fixed exchange rate system, at the exchange rate of E₁, the dollar is __________ and there is a __________ of pesos.

The exchange rate is $1 = 110 yen. If the price of a Japanese good is 37,500 yen, what is the approximate price of the good in dollars?

The U.S. real interest rate rises relative to Japan's. As a result,

Suppose there is a decrease in U.S. income and Mexican income does not change. We would expect to see

As the dollar price of the Mexican peso falls, the __________ Mexican goods will be for Americans to purchase and the __________ Mexican goods Americans will buy; thus __________ pesos will be demanded.

The purchasing power parity theory states that

The answer is: "When the official price of a currency is lowered." What is the question?

If Japanese real interest rates fall relative to real interest rates in the U.S., the yen will likely appreciate and the dollar will likely depreciate.

Proponents of the fixed exchange rate system argue that

When the official dollar price of a foreign currency is set below its equilibrium level, the dollar

Suppose there are only two countries in the world, Mexico and the United States. In the foreign exchange market, it follows that the

Suppose that prices in the United States rise relative to prices in France. We expect that (on the foreign exchange market) the demand for U.S. dollars will __________ and the supply of dollars will __________.

Under a fixed exchange rate system, if the dollar price of the Japanese yen is below its equilibrium level, the yen is referred to as overvalued and the dollar must be undervalued.

We start with a 3 percent real interest rate in the United States and in Japan. Next, the real interest rate in Japan falls to 2 percent, and the U.S. real interest remains constant. As a result,

In a foreign exchange market diagram with pesos per dollar on the vertical axis, the quantity of __________ would be on the horizontal axis, and the U.S. demand for Mexican goods would help to determine the __________ curve.

If it takes 118 Japanese yen to buy one dollar, then how many dollars does it take to buy one euro?

If world markets change so that the U.S. dollar is no longer the primary reserve currency, the exchange rate value of the dollar would rise.

Suppose that the exchange rate between the U.S. dollar and the Mexican peso is 1 peso = $0.11. If the U.S. dollar price per Mexican peso changes to 1 peso =$0.10, the peso is said to have __________ and the dollar to have __________.