Exam 12: Exchange-rate Determination

Assume that interest rates in the United States and Britain are the same.If a U.S.resident anticipates that the exchange value of the dollar is going to appreciate against the pound,she should:

Under a system of floating exchange rates,relatively low productivity and high inflation rates in the United States result in:

When deciding between U.S.and British government securities,an American investor typically considers:

An exchange rate is said to ____ when its short-run response to a change in market fundamentals is greater than its long-run response.

Which example of market expectations causes the dollar to appreciate against the yen--expectations that the U.S.economy will have:

The quantity of Canadian dollars supplied to the foreign exchange market would increase if,other things remaining equal:

The supply of francs,would shift to the right for all of the following reasons except:

Concerning exchange rate forecasting,technical analysis extrapolates from past exchange-rate trends while ignoring economic and political determinants of exchange rates.

Figure 12.1 The Market for Francs -Refer to Figure 12.1.Should the U.S.price level rise relative to the Swiss price level,there would occur a (an):

Given an efficient foreign exchange market,the spot rate is the rational approximation of the markets expectation of the forward rate that will exist at the end of the forward period.

Concerning exchange rate forecasting,____ is a common sense approach based on a wide array of political and economic data.

The U.S.demand for pesos would shift to the right if there occurred a (an):

The international exchange value of the U.S.dollar is determined by:

Given a floating exchange rate system an increase in ____ would cause the dollar to appreciate against the euro.

For purchasing-power parity to exist:

Long-run determinants of exchange rate include labor productivity levels,inflation rates,consumer preferences for goods and services,and trade barriers.

What is the asset market approach to exchange rate determination?

Under floating exchange rates,relatively low domestic interest rates tend to promote depreciation of a currency's exchange value while relatively high domestic interest rates lead to currency appreciation.

Suppose that the yen-dollar exchange rate changes from 85 yen per dollar to 80 yen per dollar.One can say that the:

Which of the following is likely to result in long-run depreciation of the U.S.dollar relative to the euro?