Exam 20: Exchange Rates, Balance of Payments, and International Debt

Suppose a U.S.-made machine costs $500 and the exchange rate was 100 yen = $1 yesterday. Today the exchange rate is 90 yen = $1. You know then that the

All of the following are examples of changes in U.S. assets abroad except

-In Exhibit FF-6, the market-determined exchange rate of dollars per British pound is 1.80. If the exchange rate is fixed at $1.90 per pound, then

An increase in Mexican incomes will have what effect on the foreign exchange market for Mexican pesos?

When two people from two different nations with two different currencies get together, often they cannot decide exactly how to trade money for goods. Fortunately for them, there is (are)

Import controls in Mexico ____________.

A favorable balance of trade occurs when the

Explain how an increase in American interest rates will lead to an appreciation of the U.S. dollar vis-à-vis the British pound.

If one dollar exchanges for 100 Japanese yen, then

If the United States government wants to eliminate an unfavorable balance of trade, it could

An increase in the exchange rate for a currency will increase the demand for that currency.

"It's a competitive world out there and holding on to export markets is difficult." Thegovernment can do little to help if

If the exchange rate, dollars per euro, is above its equilibrium level, it will heighten the possibility that France will experience a trade deficit.

In order to maintain an effective fixed exchange rate that differs from the market rate, the government must have

-Refer to Exhibit FF-5. If the U.S. government wants to maintain the foreign exchange rate at 100 yen = $1, and the demand for dollars shifts from D to D^', the government should

The demand curve for Japanese yen is downward sloping because as the price of a yen declines, such as dollars per yen, people buy fewer Japanese goods.

Micromania has recently experienced a slowdown in its labor productivity growth relative to its international trading partners. Micromania can expect, if this trend continues, the currency of its trading partners to be devalued.

The demand curve for Japanese yen is downward sloping because when the exchange rate (dollars per yen) falls,

Which statement makes sense?

A country that exhausts its foreign exchange reserves and then resorts to devaluation may be said to have