Exam 12: Exchange-Rate Determination

The supply of francs,would shift to the right for all of the following reasons except:

The appreciation in the value of the dollar in the early 1980s is explained by all of the following except:

Given floating exchange rates,assume that the Swiss decrease their import purchases from Italy while at the same time the Italians increase their purchases of Swiss government securities.The first action by itself would lead to a (an)____ of the franc against the lira while the second action by itself would lead to a (an)____ of the franc against the lira.

Given a system of floating exchange rates,stronger U.S.preferences for imports would trigger:

When deciding between U.S.and British government securities,an American investor typically considers:

The asset market theory of exchange rate determination suggests that the most important factor influencing the demand for domestic and foreign securities is:

Concerning exchange-rate determination,"market fundamentals" include all of the following except:

The figure below illustrates the supply and demand schedules of Swiss francs under a system of floating exchange rates. Figure 12.2.The Market for Swiss Francs -Refer to Figure 12.2.If the United States decreases tariffs on imports from Switzerland,there would occur a decrease in the demand for francs and a decrease in the dollar price of the franc.

The demand in the United States for yen will increase if,other things remaining equal:

For purchasing-power parity to exist:

The figure below illustrates the supply and demand schedules of Swiss francs in a market of freely-floating exchange rates. Figure 12.1 The Market for Francs -Refer to Figure 12.1.Should preferences for imports rise in the United States and fall in Switzerland,there would occur a (an):

According to the law of one price,identical goods should cost the same in all nations,assuming there are no shipping costs nor trade barriers.

Under a system of floating exchange rates,relatively high productivity and low inflation rates in the United States result in:

Which of the following is likely to result in long-run depreciation of the U.S.dollar relative to the euro?

High real interest rates in the United States tend to:

Long-run determinants of exchange rate include labor productivity levels,inflation rates,consumer preferences for goods and services,and trade barriers.

For the United States,suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent.For Japan,suppose the annual interest rate equals 5 percent.These variables would cause investment funds to flow from:

What is the purchasing power parity approach to exchange rate determination?

What is the asset market approach to exchange rate determination?

If consumer tastes in the United States change in favor of goods produced in France,the demand for francs will increase which causes an appreciation of the dollar against the franc under a floating exchange rate system.