Exam 6: Managing in the Global Economy

Trading partners should specialize in producing goods in accordance with comparative advantage,then trade and diversify in consumption because

When a manufacturer's home currency appreciates substantially,

In a recession,the trade balance often improves because

An increase in the exchange rate of the U.S.dollar relative to a trading partner can result from

Regarding operating risk exposure,which of the following statements is NOT true?

If Janet Yellen,Chair of the Federal Reserve Board,begins to tighten monetary policy by raising US interest rates next year,what is the likely impact on the value of the dollar?

In the last twenty-five years,the Yen and German mark and now the Euro have

If the value of the U.S.dollar rises from € 1.0 per dollar to € 1.3 per dollar,

Regarding short-range exchange rate movements,which of the following statements is NOT true?

Purchasing power parity or PPP says the ratios composed of:

Suppose nominal interest rates in the U.S.rise from 4.6% to 5% and decline in Britain from 6% to 5.5%,while U.S.consumer inflation remains unchanged at 1.9% and British inflation declines from 4% to 3%.In addition suppose,real growth in the U.S.is forecasted for next year at 4% and in Britain real growth is forecasted at 5%.Finally,suppose producer price inflation in the U.S.is declining from 2% to 1% while in Britain producer price inflation is rising from 2% to 3.2%.Explain what effect each of these factors would have on the long-term trend exchange rate ( £ per $)and why?

Using demand and supply curves for the Japanese yen based on the $/¥ price for yen,an increase in US INFLATION RATES would

The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time

If the British pound (£)appreciates by 10% against the dollar:

European Union labor costs exceed U.S.and British labor costs primarily because

The optimal currency area involves a trade-off of reducing transaction costs but the inability to use changes in exchange rates to help ailing regions.If the US,Canada,and Mexico had one single currency (the Peso-Dollar)we would tend to see all of the following EXCEPT:

In Chinese coastal provinces,brick housing for a fast expanding middle class is very comparable in size to housing in the U.S.for a family with median income of $51,000 because

An appreciation of the U.S.dollar has what impact on Harley-Davidson (HD),a U.S.manufacturer of motorcycles?

Companies that reduce their margins on export products in the face of appreciation of their home currency may be motivated by a desire to

In an open economy with few capital restrictions and substantial import-export trade,a rise in interest rates and a decline in the producer price index of inflation will