Unit 6 Econ Review

Suppose that the exchange rate between the United States dollar ($) and the Thai currency, baht (฿), is ฿1=$0.05. Leticia wants to buy a ฿600 souvenir from Thailand. What is the souvenir's price in dollars?

$30

The exchange rate for one Qatari riyal was 0.5 Turkish lira in 2012, and it increased to 1.25 Turkish lira in 2018. Which of the following is true about the value of the Turkish lira in 2018 ?

1 Turkish lira == 0.8 Qatari riyal, and the Turkish lira depreciated.

Assume Country X's economy is experiencing high rates of inflation. Which of the following policies will control the problem of inflation, and what is the consequent effect on the value of Country X's currency in foreign exchange markets?

A contractionary monetary policy will increase interest rates, which will cause the currency to appreciate.

Which of the following will happen to aggregate demand in the United States if the United States dollar appreciates in foreign exchange markets?

Aggregate demand will decrease because net exports will decrease.

Which of the following changes in the United States will most likely increase aggregate demand in Japan?

An appreciation of the United States dollar relative to the yen

Which of the following will most likely cause an inflow of financial capital to Canada?

An increase in the Canadian federal budget deficit

Which of the following transactions is recorded as a credit entry in the country's current account?

Exports of consumer goods

Which of the following is recorded in a country's balance of payments accounts?

Financial capital flows between the country and the rest of the world

If the current exchange rate for one Swiss franc is 0.84 euro and the equilibrium exchange rate for one Swiss franc is 0.88 euro, which of the following will occur in the flexible exchange market for the Swiss franc?

The Swiss franc will appreciate.

How will an increase in private savings in the United States most likely affect financial capital flows and the value of the dollar in foreign exchange markets?

The United States will experience financial capital outflows, and the dollar will depreciate.

Suppose that Angola's economy is booming resulting in an increase in the income of domestic residents. How will the increase in income most likely affect the foreign exchange value of the Angolan currency, the kwanza, and the Angolan net exports?

The kwanza will depreciate and net exports will decrease.

Assuming the government of a country imposes a tariff on its imports of foreign goods, what is the likely effect on the country's currency in foreign exchange markets?

The supply of the currency will decrease and the currency will appreciate.

Assume that a nation's government uses an expansionary fiscal policy to restore full employment. What effect will the resulting change in the price level have on the supply and demand of the nation's currency in the foreign exchange market?

The supply will increase and the demand will decrease.