Exam 19: The Foreign Exchange Market

________ in the domestic interest rate causes the demand for domestic assets to shift to the ________ and the domestic currency to depreciate,everything else held constant.

When the value of the British pound changes from $1.25 to $1.50,the pound has ________ and the Canadian dollar has ________.

In the model of the demand and supply of dollar assets use a graph to explain how a change in the domestic interest rate affects the equilibrium exchange rate.

A decrease in the foreign interest rate causes the demand for domestic assets to shift to the ________ and the domestic currency to ________,everything else held constant.

If the Brazilian demand for Canadian exports rises at the same time that Canadian productivity rises relative to Brazilian productivity,then,in the long run,________,everything else held constant.

The theory of purchasing power parity cannot fully explain exchange rate movements because ________.

________ in the foreign interest rate causes the demand for domestic assets to shift to the ________ and the domestic currency to appreciate,everything else held constant.

A decrease in the domestic interest rate causes the demand for domestic assets to ________ and the domestic currency to ________,everything else held constant.

The theory of PPP suggests that if one country's price level falls relative to another's,its currency should ________.