Exam 20: The Foreign Exchange Market

When the effects of the global financial crisis started to spread more quickly throughout the rest of the world,the U.S.dollar ________ because demand for U.S.assets ________.

Everything else held constant,increased demand for a country's exports causes its currency to ________ in the long run,while increased demand for imports causes its currency to ________.

As the relative expected return on dollar assets increases,foreigners will want to hold more ________ assets and less ________ assets,everything else held constant.

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

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

Suppose that the Federal Reserve enacts expansionary policy.Everything else held constant,this will cause the demand for U.S.assets to ________ and the U.S.dollar to ________.

If the dollar depreciates relative to the Swiss franc

If the Japanese yen appreciates from $0.01 per yen to $0.02 per yen,the U.S.dollar depreciates from ________ per dollar to ________ per dollar.

Evidence from the United States during the period 1973-2002 indicates that the value of the dollar and the measure of the ________ interest rate rose and fell together.

Everything else held constant,when the current value of the domestic exchange rate increases,the ________ of domestic assets ________.

An agreement to exchange dollar bank deposits for euro bank deposits in one month is a

If the U.S.Congress imposes a quota on imports of Japanese cars due to claims of "unfair" trade practices,and Japanese demand for American exports increases at the same time,then,in the long run ________,everything else held constant.

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

If the British pound appreciates from $0.50 per pound to $0.75 per pound,the U.S.dollar depreciates from ________ per dollar to ________ per dollar.

Everything else held constant,if a factor increases the demand for ________ goods relative to ________ goods,the domestic currency will appreciate.

According to the interest parity condition,if the domestic interest rate is 10 percent and the foreign interest rate is 12 percent,then the expected ________ of the foreign currency must be ________ percent.

The starting point for understanding how exchange rates are determined is a simple idea called ________,which states: if two countries produce an identical good,the price of the good should be the same throughout the world no matter which country produces it.

The immediate (two-day)exchange of one currency for another is a

An increase in the expected future domestic exchange rate causes the demand for domestic assets to ________ and the domestic currency to ________,everything else held constant.

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