Exchange Rates

False

(True/False Denotes a common misunderstanding about exchange rates) A depreciating currency must be better than an appreciating currency.

False

(True/False Denotes a common misunderstanding about exchange rates) A weaker currency must be better than a stronger currency.

True

(True/False Denotes a common misunderstanding about exchange rates) An appreciating currency must be better than a depreciating currency.

False

(True/False Denotes a common misunderstanding about exchange rates) An appreciating currency must be better than a stronger currency.

False

(True/False is participating in the forgien exchange markets) An lowa travel firm that arranges vacation tours for local seniors to Hawaii

True

(True/False is participating in the forgien exchange markets) Boston business firms trading goods and services with firms in France.

True

(True/False is participating in the forgien exchange markets) International investors buying bonds issued by a German car manufacturing firm

True

(True/False is participating in the forgien exchange markets) International investors buying part-ownership of a mining operation in Afghanistan

Exchange rate depreciation

A central bank must be concerned about whether a large and unexpected _____ will drive most of the country's existing banks into bankruptcy.

Decrease, depreciate

A decrease in foreign demand for U.S. exports will _____ the demand for U.S. dollars and cause the U.S. dollar to _____ in value.

Weakening, less

A depreciating U.S. dollar is _____ because it is worth _____ in terms of other currencies.

American tourists traveling in France

A stronger euro is less favorable for: German tourists traveling abroad, American tourists traveling in France, Canadian firms selling in Germany, or Canadian investors with money investments in Germany?

Between every pair of currencies

At any given moment there is one exchange rate...

No

Can the U.S. dollar and the German Deutsche Mark both appreciate relative to each other?

The tools of demand and supply

Exchange rates are an effective way to analyze the price of one currency in terms of another currency with...

Swings in exchange rates

For firms engaged in international lending and borrowing _____ can have an enormous effect on profits.

Appreciated against the U.S. dollar

If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then the Canadian dollar...

The dollar strengthened against the peso

If 1000 Mexican pesos could buy $100 U.S. dollars in 2006 and $87 U.S. dollars in 2010, then...

The dollar depreciated against the yen

If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then...

Have less reason to vary

If a central bank focuses on preventing either high inflation or deep recession by using low and reasonably steady interest rate policy, then exchange rates will...

Determine its own nationally-oriented monetary policy

If a nation merges its currency with another nation to create a single currency, what must it give up? The ability to...

Other currencies depreciate

If the dollar appreciates, it can be said that...

160

If the exchange rate between euros and dollars were 2 euros per dollar, when a French tourist buys a good valued at S80, its cost in curos would be Euro _____.

5

If the exchange rate between yen and dollars were 120 yen per dollar, when an American purchases a good valucd at 600 yen, its cost in dollars would be $_____.

1/8.24, 1/6.64

In 2010, $1.00 U.S. bought 8.24 Chinese yuan and in 2012 it bought 6.64 Chinese yuan. How many U.S. dollars could 1 Chinese yuan purchase in 2010 and 2012? 2010- _____=.12 U.S dollars and 2012- _____=.15 U.S dollars.

1/.56, 1/.51

In 2010, 1 Swiss franc cost .56 British pounds and in 2012 it cost .51 British pounds. How much would 1 British pound purchase in Swiss francs in 2010 and 2012? 2010- _____=1.79 francs and 2012- _____=1.96 francs

100/.88, 100/.93

In 2010, 100 Japanese yen purchased .88 U.S. dollars and in 2013, it purchased .93 U.S. dollars. How much was 1 U.S. dollar worth in Japanese yen, in 2010 and 2013? 2010- _____=113.6 yen and 2013- _____=107.5 yen.

Demand for German marks

Judy Potter, an American, wants to purchase a German automobile. Jim Potter, Judy's husband, wants to purchase German stocks. IBM, Judy's employer, wants to buy a small computer firm in Germany. All are of these examples would lead to a _____.

.667

On May 16, 1999, the U.S. dollar was worth 1.50 Canadian dollars. How many U.S. dollars did it take to buy one Canadian dollar?

Foreign exchange market

People or firms use one currency to purchase another currency at the...

A self-fulfilling prophecy

Short run speculation in currencies can create _____, at least for a time, where an expected appreciation leads to a stronger currency and vice versa.

Low

The Canadian dollar will most likely strengthen against the U.S. dollar if the Canadian inflation rate becomes extremely _____.

Euro

The _____ is an example of a large-scale common currency

Exchange rate

The _____ states the price of one currency in terms of another currency.

U.S. dollar

The most commonly traded currency in foreign exchange markets is the _____.

Dollar to appreciate

Under a system of flexible exchange rates, an increase in the foreign demand for the U.S. dollar in the foreign exchange market will cause the...

An increase in the nation's inflation rate

What would most likely cause a nation's currency to depreciate?

If one currency appreciates relative to another, the other depreciates

Why can't the U.S. dollar and the German Deutsche Mark both appreciate relative to each other?

Purchasing power parity

_____ equalizes the prices of internationally traded goods across countries.