Exam 34: International Finance

You go on vacation to Mexico and take $1,000 with you. During your time in Mexico, the peso appreciates in value relative to the dollar. It follows that

An American good with a price tag of $89 costs 809 pesos. The exchange rate must be approximately

China has intervened in the foreign exchange market to maintain the value of its currency vis-à-vis other countries.

One example of an optimal currency area is the states within the United States.

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

If, as a result of market forces, the exchange rate changes from $1 equals 11 pesos to $1 equals 9 pesos, then the dollar has

The U.S. dollar has depreciated relative to the Japanese yen if it takes

If, under a fixed exchange rate system, the dollar price of Mexican pesos is below its equilibrium level, then the

Suppose that on Monday, a Big Mac cost $3.00 in the United States and 320 Japanese yen in Japan. On Monday, the exchange rate was $1 = 90 yen. According to the purchasing power parity theory, the yen was __________ by approximately __________ percent.

The concept of an optimal currency area arose from the debate over whether fixed or flexible exchange rates are better.

If the equilibrium exchange rate is $1 = 90 yen, then at an exchange rate of $1 = 80 yen there is a

If the equilibrium exchange rate between U.S. dollars and Japanese yen is $0.007 = 1 yen, but currently the exchange rate is $0.009 = 1 yen, then with flexible exchange rates the dollar price of a yen will __________, and the yen will __________.

In a foreign exchange market diagram with dollars per peso 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, under a fixed exchange rate system, the dollar price of a Mexican peso is above its equilibrium level, then the

The answer is: "A geographic area in which exchange rates can be fixed or a common currency used without sacrificing domestic economic goals." What is the question?

A currency has depreciated in value if it takes more of a foreign currency to buy it.

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

An overvalued dollar makes U.S.

There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. If the inflation rate in the United States rises relative to the inflation rate in Mexico, it follows that

The answer is: "The price of one currency in terms of another currency." What is the question?