Exam 42: Exchange Rates and Financial Links Between Countries

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:

If a bushel of corn sells for $2 in the United States and for 4, 000 COP (Colombian peso)in Colombia, and if 1 dollar is worth 2, 200 COP, then:

One of the advantages of floating exchange rates is that:

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 22.1 In the figure: D₁ and D₂: Demand for Brazilian reals S₁ and S₂: Supply of Brazilian reals Refer to Figure 22.1.Determine the equilibrium exchange rate and equilibrium quantity of Brazilian reals, if D₁ and S₁ are the relevant demand and supply curves for Brazilian reals in this market.

The primary function of the World Bank is to:

Interest rate parity can be summarized by which of the following equilibrium conditions?

Suppose a U.S.citizen invests $1, 000 to purchase a one-year Japanese bond that has an interest yield of 10 percent.If the dollar appreciates 20 percent against the Japanese yen by the maturity date, the dollar value of the proceeds is _____.

The IMF comprises of 50 member countries including all developed countries, and a few countries of Asia and Latin America.

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?

Which of the following exchange rate systems have a legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate?

The euro floats against other currencies, but the member nations of the euro have no separate national money.For this reason, Spain, that uses the euro as its currency is listed under the managed float arrangement.

If you receive a dollar return of 6 percent on a one-year Korean bond that yields 10 percent annually, this means that between the purchase date and the time of maturity:

Which of the following had resulted from the Smithsonian agreement of 1971?

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

If $1 was equivalent to 120 Japanese yen in 2008 and 125 Japanese yen in 2010, it implies in 2010, there was:

Because of their greediness, speculators are considered bad for exchange-rate markets.

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:

When the domestic currency depreciates, domestic goods become more expensive to foreign buyers.

Assume that you have just returned to the United States from a summer vacation in Russia, where you exchanged American dollars for Russian rubles.Your economic actions can be said to have:

Under the Bretton Woods system, international debts were settled in: