Econ Final ch. 8

12) A substantial appreciation of the U.S. dollar will likely result in, all else equal A) lower demand for U.S. products and layoffs of U.S. workers. B) increased demand for U.S. products and increased employment of U.S. workers. C) lower foreign currency prices of U.S. products in foreign countries. D) higher U.S. dollar prices of foreign products in the United States.

A

24) If the interest rate in the United States rises A) investors increase their demand for dollars and the U.S. exchange rate appreciates. B) investors increase their demand for dollars and the U.S. exchange rate depreciates. C) investors decrease their demand for dollars and the U.S. exchange rate appreciates. D) investors decrease their demand for dollars and the U.S. exchange rate depreciates.

A

5) An exception to the law of one price occurs if A) the good is not tradeable. B) demand for the good is stronger in some countries than in others. C) exchange rates are flexible, rather than fixed. D) interest rates differ across countries.

A

8) When a country's nominal exchange rate appreciates, the price of A) that country's goods abroad increases. B) that country's goods abroad decreases. C) foreign goods sold in the country increases. D) that country's goods produced and sold at home increases.

A

10) If the Japanese yen appreciates against the U.S. dollar A) Japanese businesses gain by a decrease in the dollar price of exports to the United States. B) Japanese consumers gain by a decrease in the yen price of U.S. exports to Japan. C) Japanese consumers lose by an increase in the yen price of U.S. exports to Japan. D) U.S. consumers gain by a decrease in the dollar price of Japanese exports to the United States.

B

23) When it takes more euros to purchase a dollar, the dollars is said to have A) depreciated. B) appreciated. C) It depends on whether one is using direct or indirect quotations. D) It depends on whether one is considering cross rates or exchange rates.

B

25) If foreign interest rates rise A) the demand for domestic currency rises, causing it to appreciate. B) the demand for domestic currency falls, causing it to depreciate. C) the demand for domestic currency rises, causing it to depreciate. D) the demand for domestic currency falls, causing it to appreciate.

B

27) Which of the following would cause the nominal exchange rate to depreciate? A) The real exchange rate appreciates. B) The domestic inflation rate increases. C) The foreign inflation rate increases. D) The government budget deficit increases.

B

28) Which of the following would cause the nominal exchange rate to appreciate? A) The real exchange rate depreciates. B) The domestic inflation rate decreases. C) The domestic inflation rate increases. D) The government budget deficit decreases.

B

7) A change in the dollar value of the British pound from $1.60 to $1.50 represents A) an increase in the pound price of British goods. B) an appreciation of the dollar relative to the pound. C) an appreciation of the pound relative to the dollar. D) an increase in the dollar price of British goods.

B

9) When a country's nominal exchange rate depreciates, the price of A) that country's goods abroad increases. B) that country's goods abroad decreases. C) foreign goods sold in the country decreases. D) that country's goods produced and sold at home decreases.

B

11) If the British pound depreciates against the U.S. dollar A) British businesses gain by an increase in the dollar price of exports to the United States. B) British consumers gain by a decrease in the pound price of U.S. exports to Britain. C) British consumers lose by an increase in the pound price of U.S. exports to Britain. D) U.S. consumers lose by an increase in the dollar price of British exports to the United States.

C

14) The law of one price does NOT hold for A) agricultural goods. B) tradeable goods. C) differentiated goods. D) goods whose production causes pollution.

C

29) Which of the following will take place in the foreign exchange market if there is an increase in the demand for products made in the United States? A) The supply of dollars will decrease. B) The demand for dollars will decrease. C) The demand for dollars will increase. D) The dollar will decrease in value.

C

4) The law of one price states that A) most countries require that all entering goods have the same price. B) most countries require that all exported goods have the same price. C) identical goods should have the same price anywhere in the world. D) most countries require that the price of a good not be changed once it is already in a store and available for sale.

C

4) The nominal exchange rate is A) the difference between the interest rate in one country and the interest rate in another country. B) the rate at which a bond may be exchanged for currency. C) the rate at which a stock may be exchanged for currency. D) the price of one country's currency in terms of another's.

D