A central bank that desires a (an) _ of its currency

A central bank that desires a (an) ______ of its currency would likely implement a ______ monetary
policy.
a depreciation; neutral
.
b appreciation; expansionary
.
c depreciation; contractionary
.
d appreciation; contractionary
. Suppose that $1 will buy 0.8 Swiss francs in 2015 and 0.9 francs in 2016. This change would have
occurred as a result of
a no change in the supply of dollars in the foreign exchange market
.
b a decrease in the demand for dollars in the foreign exchange market
.
c an increase in the supply of dollars in the foreign exchange market
.
d an increase in the demand for dollars in the foreign exchange market
. Given a system of floating exchange rates, if Canada's labor productivity rises relative to the labor
productivity of its trading partners:
a Canadian imports will rise and the dollar will appreciate
.
b Canadian imports will rise and the dollar will depreciate
.
c Canadian imports will fall and the dollar will depreciate
.
d Canadian imports will fall and the dollar will appreciate
. The ______ is currently the main reserve currency of the global trading and financial system
a Chinese yuan
.
b Euro
.
c U.S. dollar
.
d British pound
. 1. The value of direct investment by Ford Motor Co. in Canada is included in the U.S.
a net export account
.
b current account
.
c capital and financial account
. d merchandise trade account
.
2.5 points 1. When a country realizes a deficit on its current account:
a It becomes a net supplier of funds to other countries
.
b It becomes a net demander of funds from other countries
.
c It realizes an excess of imports over exports on goods and
. services
d Its net foreign investment position becomes positive
.
2.5 points 1. QUESTION 9
The U.S. balance of trade is determined by:
a Exchange rates
.
b Growth of economies overseas
.
c Relative prices in world markets
.
d All of the above
.
2.5 points QUESTION 10
1.
When the dollar depreciates
a U.S. exporters tend to sell more goods in foreign markets
.
b U.S. consumers travel abroad more cheaply
.
c More foreign tourists can afford to visit the United States
.
d both a and c
.
2.5 points 1. QUESTION 11
Under a floating exchange-rate system, if the U.S. dollar depreciates against the Swiss franc:
a American exports to Switzerland will be cheaper in francs
.
b American exports to Switzerland will be more expensive in francs
.
c American imports from Switzerland will be cheaper in dollars
.
d None of the above
.
2.5 points QUESTION 12 1. If Mexico dollarizes its economy, it essentially
a Allows the Federal Reserve to be its lender of last resort
.
b Accepts the monetary policy of the Federal Reserve
.
c Ensures that its business cycle was identical to that of the U.S.
.
d Abandons its ability to run governmental balanced budgets
.
2.5 points Suppose the exchange rate between the U.S. dollar and the Japanese yen is initially 90 yen per dollar.
According to purchasing power parity, if the price of traded goods falls by 5 percent in the United States
and rises by 5 percent in Japan, the exchange rate will become:
a 99 yen per dollar
.
b 72 yen per dollar
.
c 81 yen per dollar
.
d 108 yen per dollar
.
2.5 points 1. QUESTION 14
Factors that will shift the demand curve for pounds include all of the following except
a the expected future exchange rate of the pound
.
b interest rates around the world
.
c the current exchange rate of the pound
.
d inflation rates around the world
.
2.5 points 1. QUESTION 15
If wheat costs $4 per bushel in the United States and 2 pounds per bushel in Great Britain, then in
the presence of purchasing-power parity the exchange rate should be:
a $8.00 per pound
.
b $.50 per pound
.
c $2.00 per pound
.
d $1.00 per pound
.
2.5 points 1. QUESTION 16
When deciding between U.S. and British government securities, an American investor typically
considers:
a Shifts in the demand for U.S. goods and British goods
.
b U.S. and British interest rates and anticipated changes in the exchange rate
.
c Budget deficits of the U.S. government and British government
.
d U.S. and British inflation rates and anticipated changes in the exchange
. rate 1. Which of the following is likely to result in long-run depreciation of the U.S. dollar relative to the
euro?
a Stronger American preferences for goods produced in Europe
.
b Tariffs levied by the United States on steel imports from Europe
.
c Relatively low interest rates in the United States
.
d Relatively high labor productivity in the United States
. 1. Which of the following tends to cause the U.S. dollar to appreciate in value?
a An increase in U.S. prices above foreign prices
.
b An increase in the level of U.S. income
.
c Rapid economic growth in foreign countries
.
d A fall in U.S. interest rates below foreign levels
. 2.5 points 1. QUESTION 19
Under a system of floating exchange rates, relatively high productivity and low inflation rates in
the United States result in:
a An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a
. depreciation in the dollar
b An increase in the demand for foreign currency, an increase in the supply of foreign currency, and
. an appreciation in the dollar
c A decrease in the demand for foreign currency, an increase in the supply of foreign currency, and
. an appreciation in the dollar
d A decrease in the demand for foreign currency, a decrease in the supply of foreign currency, and a
. depreciation in the dollar
2.5 points 1. QUESTION 20
If Japanese investors purchase Treasury Bills of the U.S. government, this results in a a credit transaction in the U.S. current account
.
b credit transaction in the U.S. capital and financial account
.
c debit transaction in the U.S. capital and financial account
.
d debit transaction in the U.S. current account
.
2.5 points QUESTION 21
1.
Which exchange-rate system does not require monetary reserves for official exchange-rate
intervention?
a Dual exchange rates
.
b Floating exchange rates
.
c Managed floating exchange rates
.
d Pegged exchange rates
. 2.5 points 1. QUESTION 22
A depreciation of the dollar will have its most pronounced impact on imports if the demand for
imports is:
a Elastic
.
b Inelastic
.
c Constant
.
d Unitary elastic
.
2.5 points 1. QUESTION 23
To temporarily offset an appreciation in the dollar's exchange value, the Federal Reserve could
____ the U.S. money supply which would promote a (an) ____ in U.S. interest rates and a ____ in
investment flows to the United States.
a Decrease, increase,
. decrease
b Decrease, decrease,
. decrease
c Increase, increase,
. decrease
d Increase, decrease,
. decrease Which of the following does not explain long-run movements in
exchange rates?
a price level differences among nations
.
b interest rate differences among nations
.
c barriers to trade (tariffs and quotas) among nations
.
d productivity differences among nations
. 2.5 points QUESTION 26
Most foreign exchange trading occurs between banks and:
a Corporations
.
b National governments
.
c Household investors
.
d Other banks
.
2.5 points QUESTION 27
The relationship between the exchange rate and the prices of tradable
goods is known as the:
a Asset-markets theory
.
b Balance-of-payments theory
.
c Purchasing-power-parity theory
.
d Monetary theory
.
2.5 points QUESTION 28
High real interest rates in the United States tend to:
a Increase the demand for dollars, causing the dollar to depreciate
.
b Decrease the demand for dollars, causing the dollar to depreciate
. c Decrease the demand for dollars, causing the dollar to appreciate
.
d Increase the demand for dollars, causing the dollar to appreciate
. 1. When the U.S. dollar appreciates against the Mexican peso, the peso becomes ______ and the
U.S. exchange rate ______.
a less expensive; declines
.
b more expensive; rises
.
c more expensive; declines
.
d less expensive; rises
. 2.5 points 1. QUESTION 31
On the balance-of-payments statements, merchandise imports are classified in the:
a Unilateral transfer account
.
b Current account
.
c Capital account
.
d Official settlements account
.
2.5 points QUESTION 32
1.
The nominal exchange rate is the
a rate at which stocks and bonds may be exchanged for currency .
b the rate at which domestic bank deposits and foreign bank deposits are
. exchanged
c the price of one country's currency in terms of another country's currency
.
d rate of return on Treasury bills, notes, and bonds
.
2.5 points QUESTION 33
1.
In recent years, the United States has accused China of manipulating the yuan so as to gain an
unfair competitive advantage in global trade. Thus, proposals have been made that the United States
should offset China's currency manipulation by
a selling and buying dollars, thus appreciating the yuan against the dollar
.
b buying yuan and selling dollars, thus appreciating the yuan against the dollar
.
c selling yuan and buying dollars, thus depreciating the yuan against the dollar
. d buying yuan and selling dollars, thus depreciating the yuan against the dollar
.
2.5 points QUESTION 34
1.
A depreciation of the dollar refers to:
a A fall in the dollar price of foreign currency
.
b An increase in the dollar price of foreign currency
.
c A loss of foreign-exchange reserves for the U.S.
.
d An intervention in the international money market
. 1. An appreciation in the value of the U.S. dollar against the British pound would tend to:
a Discourage the British from buying American goods
.
b Discourage Americans from buying British goods
.
c Discourage U.S. tourists from traveling to Britain
.
d Increase the number of dollars that could be bought with a pound
.
2.5 points QUESTION 37
1.
All of the following are main centers for foreign exchange trading except
a Tokyo
.
b New York
.
c Edmonton
.
d London
.
2.5 points QUESTION 38
1.
Which example of market expectations causes the dollar to appreciate against the yen-expectations that the U.S. economy will have:
a Faster economic growth than Japan
.
b More rapid money supply growth than Japan
.
c Higher future interest rates than Japan
.
d Higher inflation rates than Japan
. 2.5 points QUESTION 39 1. Which method of trading currencies involves the conversion of one currency into another at one
point in time with an agreement to reconvert it back to the original currency at some point in the future?
a Spot transaction
.
b Forward transaction
.
c Futures transaction
.
d Swap transaction
.
2.5 points 1. QUESTION 40
Suppose the exchange rate between the Japanese yen and the U.S. dollar is 100 yen per dollar. A
Japanese stereo with a price of 60,000 yen will cost:
a $60
.
b $600
.
c $6000
.
d None of the above