Exam 16: Foreign Exchange: Factors That Influence the Exchange Rate

An increase in demand for a country's _______ will cause its currency to appreciate in the long run,while an increase in demand for its _______ will cause its currency to depreciate.

Increased demand for a country's exports causes its currency to depreciate.

According to the text the critical determinant of the FX value of a currency is:

If US interest rates fall,relative to those in Australia,this will tend to _______ net lending by the Americans to Australia and may ________ the equilibrium exchange rate of US dollars to the AUD.

A tax levied on imports into a country is called a:

Research into the purchasing power parity theory may well identify a number of issues relating to the theory.Using your knowledge of the theory,which of the following is correct?

Which of the following statements regarding the floating exchange rate regime adopted by Australia in December 1983 is incorrect?

A change in the Australian dollar value of the British pound from $2.60 to $2.80 means:

Consider a textbook situation in which Australia and the USA are experiencing similar low rates of inflation.Then if the rate of inflation were to decrease significantly in USA,relative to the Australia,which of the following impacts would be expected to occur?

When a country's exchange rate appreciates,the price of:

If currency traders are anticipating a currency's foreign exchange value to increase,the:

In addition to economic variables,intervention of the government in the FX market may affect the equilibrium exchange rate.Which of the following interventions does the Australian government continue to pursue?

If Japan imports more Australian goods,all else being equal,there will be an increased:

The theory of purchasing power parity asserts that exchange rates between any two countries will adjust to reflect changes in:

If the British pound appreciates against the Australian dollar:

If the rate of growth of Australian national income decreases while the rate of growth of national incomes in most other countries remains constant,we would expect:

If the rate of growth of Australian national income increases while the rate of growth of national income in most other countries remains constant,we would expect:

Foreign exchange rates are affected by:

When a government places a direct limit on goods that may be imported,this intervention is called a tariff.

If the interest rate in Australia rises relative to the rest of the world,it is likely foreign investors would decrease their demand for Australian dollars and the Australian foreign exchange rate would rise.