MacroEcon Chapter 16 Review Help

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

A stronger euro is less favorable for:

American tourists traveling in France

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

Contractionary; reduces; stimulates

______ equalizes the prices of internationally traded goods across countries.

Purchasing power parity

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.

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

U.S. dollar

What do the economies of Greece, Ireland and Germany all share?

a common currency

If government policy allows a country's currency to be determined in the exchange rate market, then that currency will be subject to:

a floating exchange rate

Movements in exchange rates can have a powerful effect on incentives to export and import, and thus on ____________ in the economy as a whole.

aggregate demand

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

euro

From a macroeconomic point of view, increases in ____________ are an addition to aggregate demand, while increases in ___________ are a subtraction from aggregate demand.

exports; imports

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

foreign exchange market

If Australia's exchange rate is stronger than the PPP rate for several years, which of the following will likely result?

its imports will increase

When a government uses a ______ exchange rate policy, it usually allows the exchange rate to be set by the market.

soft peg

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

the Canadian inflation rate becomes extremely low.

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

the dollar depreciated against the yen.

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

the dollar strengthened against the peso