Exam 21: Financial Markets, Saving, and Investment

Suppose that the exchange rate between Canadian dollars and U.S. dollars is $0.60 U.S. dollars per Canadian dollar. If the exchange rate goes to $0.50 U.S. dollars per Canadian dollar, it would tend to:

If real interest rates in the United States rise relative to real interest rates in other countries, other things being equal,

Ceteris paribus, if the dollar appreciated in relation to a foreign currency, would the U.S. sell more goods or fewer goods to consumers in that foreign country? Why?

The agreement that established a system of fixed exchange rates immediately following World War II is known as the:

When real interest rates are higher in country A than country B, there will tend to be a capital flow from country B to country A.

Suppose that the exchange rate between British pounds and U.S. dollars is originally $2.50 per pound. If it then changes to $3 for 1 pound, exports of U.S. goods to Britain will tend to:

Is it possible for a currency to appreciate relative to another currency, and depreciate relative to a third?

If the interest rates available on investments in two countries were the same, you would be less likely to invest in assets of the country:

The Bretton Woods Conference:

Margaret, who lives in Des Moines, has been saving for years in order to take a trip to England this summer. She would be happy if the dollar suddenly depreciates in value against the pound.

Which of the following is true of price changes in currencies under the fixed-rate system?

Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar. If the exchange rate goes to 6 pesos per dollar, it would tend to:

The balance on current account records information about:

If more French tourists visit the Grand Canyon, what is the effect in the exchange market?

Exchange rates determined by the laws of supply and demand are called:

If the rate of inflation in the United States rises relative to the rate of inflation in foreign nations, U.S. net exports will tend to ____, causing the exchange value of the U.S. dollar to ____.

A decrease in tastes for European goods in the U.S. would ____ the demand for Euros, ____ the equilibrium price (exchange value) of Euros.

With fixed exchange rates, the imbalance between debits and credits arising from shifts in currency demand and/or supply:

Under a system of flexible exchange rates, a decrease in demand for a nation's currency in the foreign exchange market will:

If real interest rates were 6% in country A and 4% in country B, the real interest rate in both countries will move toward 5%.