Exam 11: Foreign Exchange

When the value of the Mexican peso declines relative to another currency,the exchange rate for the Peso has

The demand for foreign exchange results from transactions that appear on the

Answer the next question on the basis of the table below that shows the exchange rate between various currencies and the U.S.dollar December 2015 Exchange Rate December 2016 Exchange Rate Currency (dollars per unit of foreign currency) (dollars per unit of foreign currency) Mexican peso $0.07 $0.09 Swiss franc $1.10 $1.05 Japanese yen $0.010 $0.012 British pound $1.64 $1.58 -The demand curve for British pounds slopes downward because as the dollar ______ British goods become ______ for Americans.Therefore,Americans purchase ______ British goods and the quantity of pounds demanded increases.

Figure 11.1 illustrates the supply and demand schedules for the Swiss franc.Assume that exchange rates are flexible. Figure 11.1.Supply and Demand Schedules of Francs -Refer to Figure 11.1.Suppose the exchange rate is $.70 per franc.At this exchange rate there is an ____ of francs which leads to a ____ in the dollar price of the franc,a (an) ____ in the quantity of francs supplied,and a (an) ____ in the quantity of francs demanded.

Table 11.4.Forward Exchange Rates -Refer to Table 11.4.On Wednesday,the 180-day forward franc was selling at a:

Foreign exchange transactions are generally carried out by smaller banks located in smaller cities throughout the United States.

Figure 11.3 The Market for the Euro -Refer to Figure 11.3.If the supply curve shifts from S2 to S1

Estimates are that speculation accounts for only about 10 percent of the daily trading activity in the foreign exchange market.

-In the table above,if the exchange rate is equal to $1.00 per pound,there is a ______ and the exchange rate will______

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:

In 1987,currency speculator Andy Krieger made a lucrative currency trade.Believing that the New Zealand dollar was overvalued,Krieger bet on its fall,selling hundreds of millions of dollars at a time and pushing its value down.He profited by re-buying New Zealand dollars when the price bottomed out.What Krieger was engaging in was a (an)

Assume that the exchange rate between the euro and the pound has changed from 2 euros per pound to 3 euros per pound.We can say that the

When short-term interest rates become lower in Tokyo than in New York,interest arbitrage operations will most likely result in a(n):

Concerning the foreign exchange market,one can best say that:

In recent years,the estimated amount of foreign exchange transactions is about $1 trillion a day.

The figure below illustrates the market for Swiss francs in a world of market-determined exchange rates.Assume the equilibrium exchange rate is $0.5 per franc,given by the intersection of schedules S0 and D0. Figure 11.2.Market for Francs -Refer to Figure 11.2.A shift in the demand for francs from D0 to D1 or a shift in the supply of francs from S0 to S2,would result in a (an):

When the real exchange rate of the Japanese yen depreciates

The nominal exchange rate equals the real exchange rate adjusted for changes in the price level.

In 2013,Japanese automakers found that their vehicles were becoming more affordable to American consumers.Why? The exchange value of the yen was appreciating against the dollar.

Answer the next question on the basis of the table below that shows the exchange rate between various currencies and the U.S.dollar December 2015 Exchange Rate December 2016 Exchange Rate Currency (dollars per unit of foreign currency) (dollars per unit of foreign currency) Mexican peso $0.07 $0.09 Swiss franc $1.10 $1.05 Japanese yen $0.010 $0.012 British pound $1.64 $1.58 -The supply curve of British pounds slopes upward because as the dollar _____ American goods become ______ for the British.Therefore,the British purchase ______ American goods and the quantity of pounds supplied decreases.