Macro Exam Worksheet - Exchange rates

D) tools of demand and supply

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

A) Swings in exchange rates

For firms engaged in international lending and borrowing, ___________________ can have an enormous effect on profits

C) an Iowa travel firm that arranges vacation tours for local seniors to Hawaii

One of the following groups is not participating in the foreign exchange markets. Which one?

B) Foreign exchange market

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

C) the Canadian inflation rate becomes extremely low

The Canadian dollar will most likely strengthen against the U.S. dollar if:

A) Euro

The ___________________ is an example of a large-scale common currency.

B) U.S. dollar

The most commonly traded currency in foreign exchange markets is the:

C) 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.

D) 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.

B) weakening; less

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

B) American tourists traveling in France

A stronger euro is less favorable for

C) exports; imports

From a macroeconomic point of view, increases in _______________ are an addition to aggregate demand, while increases in _____________ are a subtraction from aggregate demand

D) the Canadian dollar 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;

C) the dollar strengthened against the peso.

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

A) 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

B) exchange rates will 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:

B) the ability to 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?

A) Euro 160

If the exchange rate between euros and dollars were 2 euros per dollar, when a French tourist buys a good valued at US $80, its cost in euros would be:

A) $5

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

A) 2010: .12 U.S. dollars; 2012: .15 U.S. dollars

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?

A) 2010: 1.79 francs, 2012: 1.96 francs

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?

C) 2010: 113.6 yen, 2013: 107.5 yen

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

C) .667

In May 20XX, the U.S. dollar was worth 1.50 Canadian dollars. How many U.S. dollars did it take to buy one Canadian dollar?

C) 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.

A) 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

D) an appreciating currency must be better than a depreciating currency

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

D) All the above

Which of the following examples would lead to a demand for Euros (the currency used by Germans)?

C) Purchasing power parity

__________________ equalizes the prices of internationally traded goods across countries