Exam 13: Introduction to Exchange Rates and the Foreign Exchange Market

In 2010, Ilzetzki, Reinhart, and Rogoff classified 182 economies, comparing the:

A nation that allowed its currency to steadily depreciate (crawl) over a six-year period is:

In European terms, when the exchange rate for the U.S. dollar increases:

Using exchange rates, it is possible to price-compare in different nations. If an iPod costs $90 in the United States and €45 in France, in which nation would you get the better deal when the dollar-euro exchange rate is $2.50/€?

Why may a "black market" develop in nations in which government has imposed capital controls?

To bypass capital controls, people who need foreign currency sometimes resort to:

To avoid the imposition of capital controls, a government wishing to keep its exchange rate at a certain level, may rely on:

Explain the difference between risky and riskless arbitrage.

The difference between the buy at and the sell at price is caused by:

When the dollar declines in value against a foreign currency, it is called a(n):

Your textbook refers to a "basket" of currencies. What is it?

The price of a foreign currency expressed in terms of the home currency is called the:

Whenever nations remove capital controls on their currencies:

Covered interest parity refers to the situation in which:

Normally, exchange rates are expressed as:

(Table: Currency Values I) The dollar rose against the rupee by:

When exchange rates are ______, agreeing to wait for one week from today to engage in an international transaction carries ______.

The notation used in the text for the euro-dollar exchange rate is:

The forward market is:

If E_$/£ increases by 20%, this is consistent with an increase from: