Question 1

The equilibrium price in the market for foreign currencies is called​

Accepted Answer

A) ​The price 
B) The market price 
C) The exchange rate 
D) ​The going rate 
A) ​The price 
B) The market price 
C) The exchange rate 
D) ​The going rate

Question 2

​Currency devaluations hurt

Accepted Answer

A) ​Consumers but help suppliers 
B) Suppliers 
C) Suppliers but help consumers 
D) ​None of the above 
A) ​Consumers but help suppliers 
B) Suppliers 
C) Suppliers but help consumers 
D) ​None of the above

Question 3

​Purchasing power parity suggests that

Accepted Answer

A) ​Given fixed prices,interest rates adjust so that a good costs the same across two countries 
B) Given fixed exchange rates,prices adjust such that a good costs the same across two countries 
C) All of the above 
D) ​None of the above 
A) ​Given fixed prices,interest rates adjust so that a good costs the same across two countries 
B) Given fixed exchange rates,prices adjust such that a good costs the same across two countries 
C) All of the above 
D) ​None of the above

Question 4

​A widget costs $50 in the US and CAD$53 in Canada.The current exchange rate is 1USD=1.09CAD.At this rate,

Accepted Answer

A) ​The good costs more in the US 
B) The good costs more in Canada 
C) The good costs the same across the two countries 
D) ​None of the above 
A) ​The good costs more in the US 
B) The good costs more in Canada 
C) The good costs the same across the two countries 
D) ​None of the above

Question 5

​John wants to buy a new lawn mower.He can either buy it in the US and pay $500 or buy it in Mexico and pay 8188 Mexican Pesos.At the exchange rate of 1 Mexican Peso=0.771US$,ignoring any other costs,he would

Accepted Answer

A) ​Prefer buying in the US 
B) Prefer buying in Mexico 
C) Be indifferent about where he buys his television 
D) ​None of the above 
A) ​Prefer buying in the US 
B) Prefer buying in Mexico 
C) Be indifferent about where he buys his television 
D) ​None of the above

Question 6

​Due to a recession in the US,the average rate of return on investments is likely to fall causing the US dollar to

Accepted Answer

A) ​Appreciate 
B) Depreciate 
C) Not change in value 
D) ​None of the above 
A) ​Appreciate 
B) Depreciate 
C) Not change in value 
D) ​None of the above

Question 7

European Vacation
After staying around 1.35 US dollars per Euro for years,the exchange rate fell below 1.25 US dollars to a euro during the summer of 2014.What affect does this have on tourism in Europe?

Accepted Answer

The demand for European vacations by Ame

Question 8

​If a panic causes Indian depositors to withdraw their money from Japanese banks,it would cause the Japanese Yen to depreciate,since the supply of Yen has________

Accepted Answer

A) ​Not changed 
B) Decreased 
C) Increased 
D) ​None of the above 
A) ​Not changed 
B) Decreased 
C) Increased 
D) ​None of the above

Question 9

​If the price of a Canadian dollar went from 0.95 US dollars to 0.98 US dollars,we would say that the US dollar has

Accepted Answer

A) ​Appreciated 
B) Depreciated 
C) Not changed in value 
D) ​None of the above 
A) ​Appreciated 
B) Depreciated 
C) Not changed in value 
D) ​None of the above

Question 10

​A weaker peso,relative to the US dollar,causes the demand for US exports to ______ and the demand of Mexican imports to______

Accepted Answer

A) ​Increase;Decrease 
B) Decrease;Increase 
C) Increase;Increase 
D) ​Decrease;Decrease 
A) ​Increase;Decrease 
B) Decrease;Increase 
C) Increase;Increase 
D) ​Decrease;Decrease

Question 11

A weaker peso,relative to the US dollar,causes the demand for US imports from Mexico to _____ and the demand for US exports to Mexico to_______​

Accepted Answer

A) ​Increase;Decrease 
B) Decrease;Increase 
C) Increase;Increase 
D) ​Decrease;Decrease 
A) ​Increase;Decrease 
B) Decrease;Increase 
C) Increase;Increase 
D) ​Decrease;Decrease

Question 12

A financial market panic that causes US depositors to withdraw their funds from Chinese banks,would cause a(n)________ in the demand of US dollars and a(n)_________in the supply of the Chinese Yuan.

Accepted Answer

A) ​Increase;Increase 
B) Increase;Decrease 
C) Decrease;Increase 
D) ​Decrease;Decrease 
A) ​Increase;Increase 
B) Increase;Decrease 
C) Decrease;Increase 
D) ​Decrease;Decrease

Question 13

​Holding other things constant,an appreciation of the US Dollar relative to the Chinese Yuan causes the demand for the Yuan to _____________ and the supply for Yuan to __________.

Accepted Answer

A) ​Increase;decrease 
B) Increase,increase 
C) Decrease;Increase 
D) ​Decrease;Decrease 
A) ​Increase;decrease 
B) Increase,increase 
C) Decrease;Increase 
D) ​Decrease;Decrease

Question 14

​For foreigners,the intersection of the demand for US dollars and the supply of US dollar is known as the

Accepted Answer

A) ​Inflation rate 
B) Exchange rate 
C) Price 
D) ​Quantity 
A) ​Inflation rate 
B) Exchange rate 
C) Price 
D) ​Quantity

Question 15

​The demand for dollars is downward sloping because when dollar appreciates,

Accepted Answer

A) ​Foreigners demand more US goods and services 
B) Foreigners demand fewer US goods and services 
C) Foreigners demand more dollars 
D) ​Foreigners do not change their demand for US goods and services 
A) ​Foreigners demand more US goods and services 
B) Foreigners demand fewer US goods and services 
C) Foreigners demand more dollars 
D) ​Foreigners do not change their demand for US goods and services

Question 16

​Holding other things constant,decreases in the price level in the US will

Accepted Answer

A) ​Cause the dollar to appreciate 
B) Cause the dollar to depreciate 
C) Cause no change in dollar value 
D) ​None of the above 
A) ​Cause the dollar to appreciate 
B) Cause the dollar to depreciate 
C) Cause no change in dollar value 
D) ​None of the above

Question 17

​If a panic causes Indian depositors to withdraw their money from Japanese banks,it would cause the Japanese Yen to ___________,since the supply of Yen has increased

Accepted Answer

A) ​Appreciate 
B) Depreciate 
C) Not change in value 
D) ​None of the above 
A) ​Appreciate 
B) Depreciate 
C) Not change in value 
D) ​None of the above

Question 18

​Which of the following is(are)the characteristics of a bubble

Accepted Answer

A) ​Bubbles emerge when investors disagree about the particular economic importance of an event 
B) Bubbles involve very large increases in trading volume 
C) Bubbles may continue even when many expect a bubble and doesn't pop until a sufficient number of skeptical investors act simultaneously 
D) ​All of the above 
A) ​Bubbles emerge when investors disagree about the particular economic importance of an event 
B) Bubbles involve very large increases in trading volume 
C) Bubbles may continue even when many expect a bubble and doesn't pop until a sufficient number of skeptical investors act simultaneously 
D) ​All of the above

Question 19

​An increase in the US demand for British pounds causes

Accepted Answer

A) ​An appreciation of the pound 
B) Depreciation of the dollar 
C) None of the above 
D) ​Both a and b 
A) ​An appreciation of the pound 
B) Depreciation of the dollar 
C) None of the above 
D) ​Both a and b

Question 20

Due to a boom in the US,the average rate of return on investments is likely to rise causing the US dollar to​

Accepted Answer

A) ​Appreciate 
B) Depreciate 
C) Not change in value 
D) ​None of the above 
A) ​Appreciate 
B) Depreciate 
C) Not change in value 
D) ​None of the above

Exam 10: Foreign Exchange, Trade, and Bubbles

The equilibrium price in the market for foreign currencies is called​

​Currency devaluations hurt

​Purchasing power parity suggests that

​A widget costs $50 in the US and CAD$53 in Canada.The current exchange rate is 1USD=1.09CAD.At this rate,

​John wants to buy a new lawn mower.He can either buy it in the US and pay $500 or buy it in Mexico and pay 8188 Mexican Pesos.At the exchange rate of 1 Mexican Peso=0.771US$,ignoring any other costs,he would

​Due to a recession in the US,the average rate of return on investments is likely to fall causing the US dollar to

European Vacation After staying around 1.35 US dollars per Euro for years,the exchange rate fell below 1.25 US dollars to a euro during the summer of 2014.What affect does this have on tourism in Europe?

​If a panic causes Indian depositors to withdraw their money from Japanese banks,it would cause the Japanese Yen to depreciate,since the supply of Yen has________

​If the price of a Canadian dollar went from 0.95 US dollars to 0.98 US dollars,we would say that the US dollar has

​A weaker peso,relative to the US dollar,causes the demand for US exports to ______ and the demand of Mexican imports to______

A weaker peso,relative to the US dollar,causes the demand for US imports from Mexico to _____ and the demand for US exports to Mexico to_______​

A financial market panic that causes US depositors to withdraw their funds from Chinese banks,would cause a(n)________ in the demand of US dollars and a(n)_________in the supply of the Chinese Yuan.

​Holding other things constant,an appreciation of the US Dollar relative to the Chinese Yuan causes the demand for the Yuan to _____________ and the supply for Yuan to __________.

​For foreigners,the intersection of the demand for US dollars and the supply of US dollar is known as the

​The demand for dollars is downward sloping because when dollar appreciates,

​Holding other things constant,decreases in the price level in the US will

​If a panic causes Indian depositors to withdraw their money from Japanese banks,it would cause the Japanese Yen to ___________,since the supply of Yen has increased

​Which of the following is(are)the characteristics of a bubble

​An increase in the US demand for British pounds causes

Due to a boom in the US,the average rate of return on investments is likely to rise causing the US dollar to​

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Investment Decisions: Look Ahead and Reason Back

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The equilibrium price in the market for foreign currencies is called

Currency devaluations hurt

Purchasing power parity suggests that

A widget costs $50 in the US and CAD$53 in Canada.The current exchange rate is 1USD=1.09CAD.At this rate,

John wants to buy a new lawn mower.He can either buy it in the US and pay $500 or buy it in Mexico and pay 8188 Mexican Pesos.At the exchange rate of 1 Mexican Peso=0.771US$,ignoring any other costs,he would

Due to a recession in the US,the average rate of return on investments is likely to fall causing the US dollar to

If a panic causes Indian depositors to withdraw their money from Japanese banks,it would cause the Japanese Yen to depreciate,since the supply of Yen has________

If the price of a Canadian dollar went from 0.95 US dollars to 0.98 US dollars,we would say that the US dollar has

A weaker peso,relative to the US dollar,causes the demand for US exports to and the demand of Mexican imports to

A weaker peso,relative to the US dollar,causes the demand for US imports from Mexico to _ and the demand for US exports to Mexico to___

A financial market panic that causes US depositors to withdraw their funds from Chinese banks,would cause a(n) in the demand of US dollars and a(n)_in the supply of the Chinese Yuan.

Holding other things constant,an appreciation of the US Dollar relative to the Chinese Yuan causes the demand for the Yuan to ___ and the supply for Yuan to .

For foreigners,the intersection of the demand for US dollars and the supply of US dollar is known as the

The demand for dollars is downward sloping because when dollar appreciates,

Holding other things constant,decreases in the price level in the US will

If a panic causes Indian depositors to withdraw their money from Japanese banks,it would cause the Japanese Yen to ___________,since the supply of Yen has increased

Which of the following is(are)the characteristics of a bubble

An increase in the US demand for British pounds causes

Due to a boom in the US,the average rate of return on investments is likely to rise causing the US dollar to