Exchange rate questions

$ to the Yen: Prices in Japan and US are rising at the same rate

Remain the same

The maintenance of money's value is said to depend on monetary authroities​. What might the monetary authorities do to a currency that can cause its value to drop?

-Increase the money supply w/o a matching increase in demand -Lower the interest rate

$ to the Yen: Real interest rate in US rises relative to real rates in Japan

Appreciate

$ to the Yen: The growth rate of national income is higher in US than in Japan

Appreciate

$ to the Yen: Inflation is higher in US than in Japan

Depreciate

$ to the Yen: The US imposes new restrictions on the ability of foreigners to buy American companies and real estate

Depreciates

How do rates change: MCI sells a new stock issue to Alcatel, the French telecommunications company. Payment in dollars is done immediately.

Dollars appreciate

How do rates change: Korean Airlines buys 5 Boeing 747s. As part of the deal, Boeing arranges a load to KAL for the purchase, the loan is to be paid back over the next 7 years.

Dollars appreciate in the future

T/F: If US interest rates are higher than European interest rates, we can conclude that US $ will depreciate against the Euro

False

T/F: In 2005 one Euro was 1,25 $, in 2009 one Euro was 1,47 $, We can say that the $ has appreciated

False

T/F: A spot rate is the price at which currencies are quoted for delivery at a specified future date.

False (this is the forward rate)

How do rates change: Seagram imports a year supply of French champange. Payment in French francs is done immediately.

Francs appreciate

T/F: A higher demand in US products and services supposes an increase in demand in US currency.

True

T/F: Countries whose central banks are less subject to government intervention tend to have lower and less volatile inflation rates and vice versa.

True

T/F: Currencies values are also affected by expectations about future exchange rates movements, like other financial assets.

True

T/F: If the rate of inflation in US is 5% and in Mexico is 8%. The peso should depreciate 3%

True

T/F: In a freely floating exchange rate regime, there is absence of government intervention.

True

T/F: The demand for euros in the foreign exchange market is equivalent to the supply in dollars, in a two-country model (Europe-USA)

True

T/F: Under a currency board system there is no central bank.

True