Exam 21: Exchapterange Rates and Financial Links Between Countries

Assume that you have just returned to the United States from a summer vacation in Russia, where you exchanged American dollars for Russian rubles. Your economic actions can be said to have:

The Bretton Woods System of exchange rates was established:

Which of the following statements concerning the International Monetary Fund is true?

Assume an Australian importer expects to pay 16,000 Australian dollars (AUD) for $8,000 worth of U.S. goods, but on the shipment date 30 days later, the same volume of U.S. goods costs the Australian importer only 10,000 Australian dollars. This means that between the contract date and the payment date, the exchange rate has changed:

Assume a U.S. investor buys a Mexican bond with a face value of MXP 1,000 and a 20 percent annual interest yield while the exchange rate is MXP 10 per dollar. What is the dollar return from the bond if the exchange rate at the end of the year is MXP 11 per dollar?

The IMF mostly receives its funds from:

An upward-sloping supply curve of Korean won in terms of Canadian dollars indicates that:

The World Bank was created to help finance economic development in poor countries.

Suppose a U.S. importer agrees to pay a Japanese firm 55,000 yen for a shipment of goods. If the agreement is made when the exchange rate is $1 = ¥100, what is the change in the dollar value of the goods if the exchange rate changes to $1 = ¥110, on the payment-due date?

Fixed exchange rates serve as a constraint on inflationary government policies.

A country on a gold standard was able to maintain people's confidence in the value of its currency by:

If a bushel of corn sells for $2 in the United States and for 4,000 COP (Colombian peso) in Colombia, and if 1 dollar is worth 2,200 COP, then:

Suppose a Canadian investor buys a one-year U.S. government bond that pays 7 percent interest. If the U.S. dollar appreciates 4 percent against the Canadian dollar during the year, what must be the yield on a comparable Canadian government bond for interest rate parity to hold?

Suppose a U.S. importer purchases "Mexican Oaxaca" cheese for $500. If the present exchange rate is Mexican peso (MXP) 10 per U.S. dollar, and the MXP appreciates 10 percent against the U.S. dollar between the date of purchase and the date of payment, then the peso value of the invoice when payment is due is:

Suppose you are a U.S. exporter expecting to receive a payment of NZD₁,000 (New Zealand dollars) in 12 months. The annual interest rate on NZD deposits is 5 percent, and the annual interest rate on dollar deposits is 9 percent. If the present exchange rate is $0.50 per NZD and interest rate parity holds, how many dollars do you expect to receive at the maturity date of the export contract?

How many U.S. dollars does a U.S. importer need to pay for 100,000 yen worth of stereo equipment when the price of 1 yen is $0.008?

To ensure interest rate parity, a decrease in the interest rate on Euroyen relative to Eurodollar deposits will require a greater expected appreciation of the Japanese yen against the U.S. dollar.

If interest rates in Europe fall below interest rates in the United States, then, other things equal, the demand for euros will decrease.

Suppose a permanent increase in demand for the Argentinean peso causes a chronic shortage of this currency in the foreign exchange market. The Argentinean government should then:

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.?Figure 21.2 -Refer to Figure 21.2. At the initial equilibrium point, with demand curve D and supply curve S₁: