ch 16

In 2009, 1 US dollar purchased 1400 korean won and in 2013 it purchased 900 korean won. How much did 1000 KOrean won cost in US dollars in 2009 and 2013

2009: .71 dollars, 2013: 1.11 dollars

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, 2012: 1.96 francs

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, 2013: 107.5 yen

In 2010, 1 US dollar bought 8.24 chinese yuan and in 2012 it bought 6.64 chinese yuan. How many US dollars could 1 chinese yuan purchase in 2010 and 2012

2010:.12 US dollars; 2012: .15 US dollars

The most commonly traded currency in foreign exchange markets is the

US dollar

what do the economies of Greece, Ireland and germany all share?

a common currency

If american airlines were to purchase Malaysian airlines, it would likely have _ in mind

a longer-term horizon

short run speculation in currencies can create _, at least for a time, where an expected

a self-fullfilling prophecy

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

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

if the US government uses an expansionary monetary policy to reduce interest rates, then it will

cause the exchange rate for US curency to depreciate

A _ monetary policy can be used to decrease aggregate demand because it _ exports and _ imports

contractionary; reduces; stimulates

the _ is an example of a large-scale common currency

euro

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

exchange rate depreciation

Portfolio investments are often made based on beliefs about how _ are likely to move in the near future

exchange rates or rates of return

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 have less reason to vary

A stronger British pound is beneficial for:

exchange students with a British scholarship studying in Canada.

from a macroeconomic point of view, increases in _ are an addition to aggregate demand, while increases in _ are a subtraction from aggregate dmeand

exports; imports

which of the following is no longer one of the most commonly traded currencies in the foreign exchange markets?

french franc

If a government uses monetary policy to alter the exchange rate, then it cannot at the same time use monetary policy to address issues of _.

inflation or recession

If the canadian dollar is strengthening, then:

it has appreciated in terms of other currencies

why would an expansionary monetary policy no longer be available to combat recession for a country that has pegged its exchange rate

it would depreciate the country's exchange rate and break its hard peg

_ equalizes the prices of intenrationally taded goods across countries

purchasing power parity

when a government uses a _ exchange rate policy, it usually allows the exchange rate to be set by the market

soft peg

a _ policy in which the government almost never acts to intervene in the exchange rate market will look a great deal like a floating exchange rate

soft peg exchange rate

if 1 US dollar bought 1.40 canadian dollars in 2006 and in 2010 it bought 1 canadian dollar then

the canadian dollar appreciated against the US dollar

the canadian dollar will most likely strengthen against the US dollar if

the canadian inflation rate become extremely low

If 112 japanese yen purchased 1 US dollar in 2008 and 83 japanese yen purchased 1 US dollar in 2009 then

the dollar depreciated against the yen

when mataeo buys euros through _, he will use his US dollars to pay for them

the foreign exchange market

Referring to the diagram above, which of the following statements is true

this expansionary monetary policy shift also includes the effect of exchange rates on exports and imports

a soft peg exchange rate may create additional _ as exchange rate markets try to anticipate when and how the government will intervene

volatility