Exam 12: Exchange-rate Determination

Figure 12.2. The Market for Swiss Francs -Refer to Figure 12.2.If the rate of inflation in the United States is higher than the rate of inflation in Switzerland,the demand for francs decreases,the supply of francs increases,and the dollar's exchange value appreciates.

When the price of foreign currency (i.e.,the exchange rate)is below the equilibrium level:

Low real interest rates in the United States tend to:

Figure 12.1 The Market for Francs -Refer to Figure 12.1.If Switzerland experienced a disastrous wheat-crop failure,leading to additional wheat imports from the United States,there would occur an:

The appreciation in the value of the dollar in the early 1980s is explained by all of the following except:

The relationship between the exchange rate and the prices of tradable goods is known as the:

Given a system of floating exchange rates,weaker U.S.preferences for imports would trigger:

Concerning exchange rate forecasting,____ involves the use of historical exchange rate data to estimate future values,while ignoring the economic determinants of exchange rate movements.

Although the law of one price predicts that identical goods should cost the same in all nations,transportation costs and tariffs tend to prevent this prediction from actually occurring.