Exam 22: International Trade

All economists agree that the European Union is an example of a true a optimal currency area.

If labor is immobile between two countries,changes in relative demand for goods and services may pose major economic problems

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.

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

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer?

If the equilibrium exchange rate between U.S.dollars and Japanese yen is $0.008 = 1 yen,but currently the exchange rate is $0.007 = 1 yen,then with flexible exchange rates the dollar price of a yen will __________,and the dollar will __________.

Exhibit 35-4 -Refer to Exhibit 35-5.Based on the information provided in this table,between Monday and Tuesday,the U.S.dollar ____________ against the Mexican peso and the peso _____________ against the U.S.dollar.

If the income of U.S.citizens falls relative to the income of Japanese citizens,the dollar will __________ in terms of the yen,and the yen will __________ in terms of the dollar.

As the dollar price of a foreign currency (for example,dollars per yen)decreases,foreign goods will be __________ expensive,__________ foreign goods will be purchased,and __________ foreign currency will be demanded.

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

If inflation in the United States rises relative to the inflation rate in Mexico,the dollar will __________ in terms of the peso and the peso will __________ in terms of the dollar.

Exhibit 35-4 -Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E₁,the peso is __________ and there is a __________.

The market in which the currencies of different countries are exchanged is called the

Exhibit 35-4 -Refer to Exhibit 35-4.Under a fixed exchange rate system,at the exchange rate of E₃,the peso is __________ and there is a __________.

The purchasing power parity theory predicts better in the __________ run,and when there __________ in inflation rates across countries.

If an international currency speculator expects that country A will soon be forced to devalue its currency,the speculator will

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

The more dollars that must be given up to buy one British pound,the __________ American goods are for the British and the __________ American goods the British will buy;thus __________ dollars will be demanded.

There is demand for and supply of dollars and a demand for and supply of pesos.Under a flexible exchange rate system,if income growth in the United States is greater than income growth in Mexico,then

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