Exam 57: Exchange Rates and Financial Links Between Countries

Suppose a U.S.importer purchases "Mexican Oaxaca" cheese for $500.If the present exchange rate is Mexican peso (MXP)10 per U.S.dollar, and the MXP appreciates 10 percent against the U.S.dollar between the date of purchase and the date of payment, then the peso value of the invoice when payment is due is:

Assume that a one-year Malaysian bond yields 10 percent interest and that the dollar return on maturity is 5 percent.If the exchange rate at maturity is $1 = MYR 4.00 (Malaysian ringgit), what was the exchange rate at the time the bond was purchased?

In effect, during the period immediately following World War II, the world was on a(n):

Suppose a permanent increase in demand for the Argentinean peso causes a chronic shortage of this currency in the foreign exchange market.The Argentinean government should then:

Suppose the price of an ounce of silver is 100 nuevos soles in Peru and $400 in the United States.This implies:

The focal point of the Bretton Woods system was the:

To ensure interest rate parity, a decrease in the interest rate on Euroyen relative to Eurodollar deposits will require a greater expected appreciation of the Japanese yen against the U.S.dollar.

What is a currency board?

Fixed exchange rates serve as a constraint on inflationary government policies.

Suppose a U.S.citizen purchases a one-year Norwegian bond that yields 10 percent interest.Between the purchase date and the maturity date, the exchange rate changes from to How much was initially invested in the bond if the dollar value of the proceeds at maturity is $3, 500? (roundoff up to the nearest whole number)

The dollar return on a foreign investment is less than the interest rate on the foreign asset, if the foreign currency depreciates against the U.S.dollar between the purchase date and the maturity date.

Under the flexible exchange rate system, when a country tries to stimulate economic growth and improve its employment rates, it is likely to cause:

The gold standard fixes the:

The figure given below depicts the demand and supply of Brazilian reals in the foreign exchange market.Assume that the market operates under a flexible exchange rate regime. Figure 36.1 In the figure: D₁ and D₂: Demand for Brazilian reals S₁ and S₂: Supply of Brazilian reals Refer to Figure 36.1.Assume that the initial equilibrium exchange rate is 6 pesos per real.Other things remaining equal, an increase in the number of Brazilian tourists to Mexico is most likely to:

Suppose the official gold value of the Brazilian real changes from 527 reals per ounce to 508 reals per ounce.We can then say that:

If the euro per dollar exchange rate changes from $1 = 0.8 euros to $1 = 0.7 euros, it implies that the euro has depreciated against the dollar.

The supply of Thai baht in the foreign exchange market originates with:

Suppose the official gold value of the Brazilian real changes from 457 reals per ounce to 528 reals per ounce.We can then say that:

Fixed exchange rates allow countries to formulate their economic policies independently of other nations.

The exchange rate that is established in the absence of foreign exchange market intervention by the government is known as a(n):