Exam 20: The Foreign Exchange Market

The theory of portfolio choice suggests that the most important factor affecting the demand for domestic and foreign assets is

A decrease in the expected future domestic exchange 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 American exports rises at the same time that U.S.productivity rises relative to Brazilian productivity,then,in the long run,________,everything else held constant.

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

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

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

The ________ states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries.

When the value of the dollar changes from £0.5 to £0.75,then the British pound has ________ and the U.S.dollar has ________.

If the interest rate on euro-denominated assets is 13 percent and it is 15 percent on peso-denominated assets,and if the euro is expected to appreciate at a 4 percent rate,for Manuel the Mexican the expected rate of return on euro-denominated assets is

When the exchange rate for the Mexican peso changes from 9 pesos to the U.S.dollar to 10 pesos to the U.S.dollar,then the Mexican peso has ________ and the U.S.dollar has ________.

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

On January 25,2009,one U.S.dollar traded on the foreign exchange market for about 3.33 Romanian new lei.Therefore,one Romanian new lei would have purchased about ________ U.S.dollars.

The condition that states that the domestic interest rate equals the foreign interest rate minus the expected appreciation of the domestic currency is called

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

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

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

Suppose that the European Central Bank conducts a main refinancing sale.Everything else held constant,this would cause the demand for U.S.assets to ________ and the U.S.dollar will ________.

________ 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.

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

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