4.1 Quiz

In 2015, $1.00 US bought 7 Chinese yuan. How many US dollars could 1 Chinese yuan purchase in 2015?

.12 US dollars

In 2009, 1 US dollar purchased 1400 Korean won and in 2013 it purchased 800 Korean won. How much did 1000 Korean won cost in US dollars in 2009 and 2013?

2009: 0.71 dollars 2013: 1.25 dollars 2009: 1400/1 = 0.00071 2013: 800/1 = 0.00125

If the US dollar appreciates, it becomes more expensive for Brazilians to visit their family in the United States

True

Which of the following denotes a common misunderstanding about exchange rates?

an appreciating currency must be better than a depreciating currency

Portfolio investments are often made based on beliefs about how__________ are likely to move in the near future

exchange rates or rates of return

If Australia's exchange rate is stronger than the PPP rate for several years, which of the following will likely result?

its imports will increase

When a nation chooses to use the currency of another nation it is known as __________ currency

merged

___________ equalizes the prices of internationally traded goods across countries

purchasing power parity

A __________ monetary policy can be used to decrease aggregate demand because it __________ exports and __________ imports

tight; stimulates; reduces

A soft peg exchange rate may create additional __________ as exchange rate markets try to anticipate when and how the government will intervene

volatility