Exam 12: Exchange Rate Determination

In the short run,exchange rates are determined by the rate at which a country's currency exchanges for silver and gold.

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

Concerning exchange rate forecasting,judgmental forecasts are common sense models that rely on a wide array of political and economic data.

The purchasing-power parity theory suffers from the problem

If Americans develop stronger preferences for Canadian natural gas,the likely result is

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 rises by 5 percent in the United States and 15 percent in Japan,the exchange rate will become:

Which example of market expectations causes the dollar to depreciate against the yen--expectations that the U.S.economy will have:

The figure below illustrates the supply and demand schedules of Swiss francs under a system of floating exchange rates. Figure 12.2.The Market for Swiss Francs -Refer to Figure 12.2.If the United States decreases tariffs on imports from Switzerland,there would occur a decrease in the demand for francs and a decrease in the dollar price of the franc.

For an American investor,the expected rate of return on European securities depends on all of the following factors except the:

In a free market,what determines exchange rates in the long run and the short run?

Under a system of floating exchange rates,relatively low productivity and high inflation rates in the United States result in:

Figure 12.3Market for British Pounds -Consider Figure 12.3.The market is initially governed by demand curve D0 and supply curve S0.Suppose US consumers develop stronger preferences for UK made goods,which supply and demand curves depict the new situation?

If the U.S.inflation rate rises to the foreign inflation rate,then in the foreign exchange market

With floating exchange rates,relatively high productivity growth for a nation leads to

The supply curve of dollars decreases (shifts to the left) in the foreign exchange market.This could be the result of

A shift in the U.S.supply curve of dollars in the foreign exchange market could be caused by all of the following except a change in

If the interest rate in Japan increases,investors increase their demand for yen and the yen's exchange value appreciates.

If the United States reduces its tariffs on the import of natural gas

Which of the following would cause the demand curve for pounds to shift to the left?

The supply of francs,would shift to the right for all of the following reasons except: