Exam 42: Exchange Rates and Financial Links Between Countries

The figure given below depicts the foreign exchange market for British pounds traded for U.S.dollars. Figure 22.2 Refer to Figure 22.2.An increase in the equilibrium quantity of British pounds from 300 to 350 would most likely mean that:

An increase in the demand for rubles causes the ruble to appreciate.

No currency ever appreciated or depreciated under the Bretton Woods system as it was based on a system of fixed exchange rates.

What is the interest rate on a 12-month U.K.certificate of deposit if the dollar return on the certificate is 4 percent and the dollar has appreciated 9 percent against the British pound?

The gold standard fixes the:

The annual membership fees of the 185 member countries of the IMF are called:

Suppose a U.S.firm buys a one-year U.K.bond for 6, 000 British pounds when 1 British pound is worth $1.50 on the foreign exchange market.What is the firm's approximate rate of return on the bond if the interest rate on the bond is 15 percent and the exchange rate is 1 British pound is worth $1.93 at maturity?

If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan, then it implies that:

A permanent shift in the foreign exchange market supply and demand curves such that the fixed exchange rate is no longer an equilibrium rate is referred to as:

Given a one-year Canadian bond with a yield of 8 percent, what will be the U.S.investor's rate of return at maturity if the Canadian dollar appreciates 10 percent against the U.S.dollar?

Purchasing power parity holds when the exchange rate is equal to the product of the foreign price level and the domestic price level.

The gold standard ended in the 1970s because the gold supplies failed to keep pace with the increase in money supplies required for industrialization and rapid economic growth witnessed in this era.