Exam 39: Exchange Rates and Financial Links Between Countries

An upward-sloping supply curve of Korean won in terms of Canadian dollars indicates that:

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.

The gold standard fixes the:

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:

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

Assume that a British investor buys a one-year U.S.Treasury bill that pays 6 percent annual interest.Given a yield of 4 percent on a comparable British Treasury bill, the U.S.dollar must depreciate 2 percent against the British pound during the year for interest rate parity to hold.

The figure given below depicts the foreign exchange market for British pounds traded for U.S.dollars. Figure 21.2 Refer to Figure 21.2.An increase in the equilibrium quantity of British pounds from 300 to 350 would most likely mean that:

Assume that a country's government influences the exchange rate through active central bank intervention, with no pre-announced path.This policy is known as a(n):

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 21.1 In the figure: D₁ and D₂: Demand for Brazilian reals S₁ and S₂: Supply of Brazilian reals Refer to Figure 21.1.The supply curves shown for Brazilian reals are based on:

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

Suppose you are a U.S.exporter expecting to receive a payment of NZD1, 000 (New Zealand dollars)in 12 months.The annual interest rate on NZD deposits is 5 percent, and the annual interest rate on dollar deposits is 9 percent.If the present exchange rate is $0.50 per NZD and interest rate parity holds, how many dollars do you expect to receive at the maturity date of the export contract?

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

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

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:

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

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

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 21.1 In the figure: D₁ and D₂: Demand for Brazilian reals S₁ and S₂: Supply of Brazilian reals Refer to Figure 21.1.Suppose the initial equilibrium exchange rate is 10 pesos per real.A decrease in the Mexican demand for Brazilian coffee, other things equal, is most likely to result in a new equilibrium exchange rate of:

Suppose the yen value of a $100, 000 wheat import contract rises from ¥12, 000, 000 to ¥13, 000, 000 between the contract and the payment date.This implies that the yen value of 1 dollar has declined so that, other things equal, we can expect an increase in Japanese demand for U.S.goods.

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:

Suppose a U.S.importer agrees to pay a Japanese firm 55, 000 yen for a shipment of goods.If the agreement is made when the exchange rate is $1 = ¥100, what is the change in the dollar value of the goods if the exchange rate changes to $1 = ¥110, on the payment-due date?