Exam 10: Understanding Foreign Exchange

A __________ shift in the demand curve for a foreign currency causes the foreign currency to __________.

An increase in German Treasury interest rates, all else held constant, causes a rightward shift in the __________ euros and causes the dollar to __________ against the euro.

Considerable day-to-day volatility in major exchange rates is caused by

If the British sell more Rolls Royce cars to the United States, the United States __________ more pounds and __________ more dollars in the foreign exchange market.

A(n)__________ in exports by the United States results in a(n)__________ in the supply of foreign exchange.

If the Japanese buy more Cadillacs, they __________ more yen and __________ more dollars in the foreign exchange market.

If prices rise in the United States, everything else constant, the dollar __________ against the yen and the yen __________ against the dollar.

An exchange rate system under which currencies are allowed to fluctuate with frequent interventions by central banks is called a

The newest fixed exchange rate system is the

Lowering a fixed exchange rate by a government is called a(n)__________ of that rate.

A rise in domestic productivity tends to __________ domestic prices and causes the dollar to __________ relative to foreign currencies.

Suppose that one-year Treasury bills yield 4 percent in the United States and 5 percent in Germany. Investors will be indifferent between them if they expect the dollar over the next year to

Since the founding of the IMF, most international reserves have been held in

A nation running a persistent balance of payments deficit while part of a fixed exchange rate system would have to __________ international reserves in an effort to prevent its currency from __________.

A deficit in our balance of payments causes the dollar to __________, which causes the deficit to __________.

We would expect the euro to depreciate when there is a __________ shift in the euro demand curve or a __________ shift in the euro supply curve.

In 1992, Britain and Italy __________ the European Monetary System and __________ against the other major European currencies.

Under the IMF fixed exchange rate system, a nation running a balance of payments deficit would have an excess __________ its currency in the foreign exchange market and that nation's central bank would have to __________ some of its currency to maintain the fixed exchange rate.

Currencies of different countries are traded in the so-called

Under the IMF fixed exchange rate system, a nation running a balance of payments surplus would have an excess __________ its currency in the foreign exchange market and that nation's central bank would have to __________ some of its currency.