Ch 16

Approximately _____ per day was traded on foreign exchange markets in 2013. Select one: a. $15 trillion b. $5 trillion c. $1 trillion d. $500 billion

$5 trillion

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 terms of Japanese yen, in 2010 and 2013? Select one: a. 2010: 113.6 yen, 2013: 107.5 yen b. 2010: 88 yen, 2013: 93 yen c. 2010: 112.4 yen, 2013: 105.3 yen d. 2010: 100 yen, 2013: 114 yen

2010: 113.6 yen, 2013: 107.5 yen

.67

How many Euros (EUR) can you buy with an Australian dollar (AUD) according to Table 1? Use U.S. dollars to go from AUD to EUR. Note, X-Y currency pair value indicates how much does a unit of currency X costs in terms of currency Y. (Round your answer to two decimal points).

Taxes on international capital flows are sometimes known as __________ taxes. Select one: a. Robot b. Tobin c. Hobbit d. Robin

Tobin

Movements in exchange rates can have a powerful effect on incentives to export and import, and thus on ________________ in the economy as a whole. Select one: a. aggregate demand b. aggregate supply c. portfolio investment d. direct investment

aggregate demand

One of the following groups is not participating in the foreign exchange markets. Which one? Select one: a. an Iowa travel firm that arranges vacation tours for local seniors to Hawaii b. international investors buying bonds issued by a German car manufacturing firm c. international investors buying part-ownership of a mining operation in Afghanistan d. Boston business firms trading goods and services with firms in France

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

Which of the following denotes a common misunderstanding about exchange rates? Select one: a. an appreciating currency must be better than a depreciating currency b. a weaker currency must be better than a stronger currency c. a depreciating currency must be better than an appreciating currency d. an appreciating currency must be better than a stronger currency

an appreciating currency must be better than a depreciating currency

A central bank must be concerned about whether a large and unexpected __________ will drive most of the country's existing banks into bankruptcy. Select one: a. exchange rate appreciation b. exchange rate depreciation c. increase in foreign investments d. interest rate increase

exchange rate depreciation

A U.S. investor abroad benefits from a stronger dollar. Select one: True False

false

If a country experiences a relatively high inflation rate compared with other countries, then it's currency will appreciate. Select one: True False

false

A stronger dollar _____ U.S. exporting firms, _____ U.S. investors abroad, _____ foreign tourists in the U.S., and _____ foreign investors in the U.S. Select one: a. hurts; hurts; benefits; benefits b. hurts; hurts; hurts; hurts c. benefits; hurts; hurts; benefits d. hurts; hurts; hurts; benefits

hurts; hurts; hurts; benefits

If the Canadian dollar is strengthening, then: Select one: a. Canada has adopted a hard peg policy b. it has appreciated in terms of other currencies c. Canada has achieved purchasing power parity d. it has been unpegged from other currencies

it has appreciated in terms of other currencies

If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then: Select one: a. the dollar appreciated against the yen b. the yen depreciated against the dollar c. the yen weakened against the dollar d. the dollar depreciated against the yen

the dollar depreciated against the yen

A U.S. dollar traded for 1.17 Canadian dollars in 1980 and by 1986 it traded for 1.39 Canadian dollars. This implies that a U.S. dollar has appreciated (strengthened) against Canadian dollar. Select one: True False

true

A U.S. tourist abroad benefits from a stronger dollar. Select one: True False

true

A higher interest rate or rate of return relative to other countries leads a nation's currency to appreciate or strength. Select one: True False

true

Demand for the U.S. dollar can come from a U.S. exporting firm that earned foreign currency and is trying to pay U.S.-based expenses. Select one: True False

true

A depreciating U.S. dollar is ________________ because it is worth ___________ in terms of other currencies. Select one: a. strengthening; more b. beneficial to importers; more c. a problem for exporters; less d. weakening; less

weakening; less