PLQ 18 and Homework 18

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

Which of the following is an example of a pegged currency?

Chinese yuan

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

French franc

The most commonly traded currency in foreign exchange markets is

U.S. Dollar

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

exchange rates or rates of return

What equalizes the prices of internationally traded goods across countries.

purchasing power parity

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 yen

Exchange rates are an effective way to analyze the price of one currency in terms of another currency with _________________________.

the tools of demand and supply

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

tight; stimulates; reduces

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

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

common currency

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

soft peg

For firms engaged in international lending and borrowing, ____________________ can have an enormous effect on profits.

swings in exchange rates

Foreign direct investment is the term used to describe purchases of firms in another country that involve_______

taking a management responsibility

A depreciating U.S. dollar is ________________ because it is worth ___________ in terms of other currencies.

weakening; less