Exam 12: Exchange Rate Determination

Concerning exchange rate forecasting,technical analysis extrapolates from past exchange-rate trends while ignoring economic and political determinants of exchange rates.

In the foreign exchange market,a decrease in the world demand for Japanese exports

The U.S.interest rate minus the foreign interest rate is called the U.S.interest rate differential.The U.S.interest rate differential would increase if

Suppose that the yen-dollar exchange rate changes from 85 yen per dollar to 80 yen per dollar.One can say that the:

The Canadian dollar would depreciate on the foreign exchange market if:

The relationship between the exchange rate and the prices of tradable goods is known as the:

In the presence of purchasing-power parity,if one dollar exchanges for 2 British pounds and if a VCR costs $400 in the United States,then in Great Britain the VCR should cost:

With floating exchange rates,easy credit and low short term interest rates lead to

Under floating exchange rates,relatively low domestic interest rates tend to promote depreciation of a currency's exchange value while relatively high domestic interest rates lead to currency appreciation.

The appreciation in the value of the dollar in the early 1980s is explained by all of the following except:

Increased tariffs on U.S.steel imports cause the dollar to ____ in the ____.

What is the purchasing power parity approach to exchange rate determination?

For the United States,suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent.For Japan,suppose the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 7 percent.These variables would cause investment funds to flow from:

Long-run exchange rate movements are governed by all of the following except:

The figure below illustrates the supply and demand schedules of Swiss francs in a market of freely-floating exchange rates. Figure 12.1 The Market for Francs -Refer to Figure 12.1.Should the U.S.price level rise relative to the Swiss price level,there would occur a (an):

Which of the following will result in a depreciation of the U.S.dollar against the Mexican peso?

Long-run determinants of the dollar's exchange value include all of the following except:

The quantity of Canadian dollars supplied to the foreign exchange market would increase if,other things remaining equal:

A primary reason that explains the appreciation in the value of the U.S.dollar in the 1980s is:

According to the theory of purchasing power parity,if the price level in France rises by 6 percent and the price level in the United States rises by 4 percent,then the dollar will