Question 1

If the interest rates available on investments in two countries were the same,you would be less likely to invest in assets of the country:

Accepted Answer

A)   whose currency was likely to appreciate.
B)   whose currency was likely to depreciate.
C)   whose currency had the greatest exchange value.
D)   none of the above; it would not matter what was likely to happen to a country's currency exchange rate.E) B) and C)
F) A) and D)

Question 2

Under a system of fixed exchange rates,what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

Accepted Answer

A nation whose currency is overvalued wi...

Question 3

Under a system of flexible exchange rates,an increase in the foreign demand for the U.S.dollar in the foreign exchange market will cause the:

Accepted Answer

A)   dollar to appreciate
B)   dollar to depreciate.
C)   U.S. trade deficit to decrease.
D)   U.S. inflation rate to increase.E) C) and D)
F) B) and C)

Question 4

Which of the following will create a demand for or a supply of currencies?

Accepted Answer

A)   Trade in goods
B)   Trade in services
C)   Trade in financial instruments
D)   Any of the above.E) B) and D)
F) C) and D)

Question 5

It has become largely accepted since the end of the Bretton Woods agreement that:

Accepted Answer

A)   the gold standard was superior to anything that has come along since.
B)   governments have no role whatsoever in determining exchange rates.
C)   it is not necessary for governments to fix exchange rates for long periods of time.
D)   floating rates simply have not worked.E) All of the above
F) None of the above

Question 6

Exhibit 29-1  Refer to Exhibit 29-1.For Nation Z,the statistical discrepancy for the year 2011 equals:

Accepted Answer

A)   -$7 billion.
B)   -$8 billion.
C)   $90 billion.
D)   $7 billion.E) None of the above
F) A) and D)

Question 7

If the exchange rate between yen and dollars were 120 yen per dollar,when an American purchases a good valued at 600 yen,its cost in dollars would be:

Accepted Answer

A)   $5.
B)   $600.
C)   $72,000.
D)   $120E) A) and B)
F) A) and C)

Question 8

If real interest rates in the United States fell and real interest rates in England rose,we would expect people to:

Accepted Answer

A)   increase their demand for British pounds.
B)   borrow more from U.S. sources.
C)   buy relatively more British assets.
D)   all of the aboveE) None of the above
F) B) and C)

Question 9

As the number of British pounds that exchange for a dollar rises on foreign currency markets:

Accepted Answer

A)   the British will have an incentive to import fewer U.S. goods.
B)   the British will find it easier to export goods to the United States.
C)   the British will find U.S. goods to be more expensive in their stores.
D)   all of the above will be true.E) A) and B)
F) A) and C)

Question 10

Stock in a German corporation can be purchased directly with currency from any other country.

Accepted Answer

A) True 
 B)False

Question 11

In foreign exchange markets,the effect of an increase in the supply of dollars on the value of the dollar is the same as that of:

Accepted Answer

A)   an increase in the supply of foreign currencies.
B)   a decrease in the supply of foreign currencies.
C)   a decrease in the demand for dollars.
D)   either (b)  or (c) E) None of the above
F) All of the above

Question 12

Reduced U.S.tastes for European goods would ____ the supply of euros and ____ the demand for euros.

Accepted Answer

A)   decrease; increase.
B)   not change; increase.
C)   increase; increase.
D)   not change; decrease.E) A) and B)
F) A) and C)

Question 13

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

Accepted Answer

A)   organized
B)   planned
C)   dirty float
D)   flexibleE) A) and D)
F) B) and D)

Question 14

Suppose a video craze in the United States makes a particular Japanese-produced video game very popular.This would tend to:

Accepted Answer

A)   affect the U.S. balance of payments but not the balance of trade.
B)   reduce any existing balance of trade deficit in the United States.
C)   increase the balance of trade deficit of the United States.
D)   increase the balance of trade surplus of the United States.E) B) and C)
F) A) and D)

Question 15

The dollar appreciates when U.S.demands for foreign currencies decrease.

Accepted Answer

A) True 
 B)False

Question 16

Explain how each of the following will affect the relative values of the dollar and the euro used in France:
· Income growth higher in the United States than in France.
· Inflation higher in France than in the United States.
· A real interest rate higher in the United States than in France.

Accepted Answer

Income growth higher in the United State...

Question 17

The recent flexible exchange rate system developed because of:

Accepted Answer

A)   the controversies generated by trade surplus nations wanting to devalue their currencies.
B)   the huge debts owed to the IMF by less-developed countries.
C)   governments were unable to agree on an alternative to a fixed-rate approach when the Bretton Woods system collapsed.
D)   the controversies generated by trade deficit nations wanting to raise the value of their currencies.E) A) and B)
F) A) and C)

Question 18

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

Accepted Answer

A) True 
 B)False

Exam 29: International Finance

If the interest rates available on investments in two countries were the same,you would be less likely to invest in assets of the country:

Correct Answer
verified

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

Correct Answer
verified

Suppose a video craze in the United States makes a particular Japanese-produced video game very popular.This would tend to:

Correct Answer
verified

Stock in a German corporation can be purchased directly with currency from any other country.

Correct Answer
verified

The dollar appreciates when U.S.demands for foreign currencies decrease.

Correct Answer
verified

Exhibit 29-1 Refer to Exhibit 29-1.For Nation Z,the statistical discrepancy for the year 2011 equals:

Correct Answer
verified

The recent flexible exchange rate system developed because of:

Correct Answer
verified

It has become largely accepted since the end of the Bretton Woods agreement that:

Correct Answer
verified

Explain how each of the following will affect the relative values of the dollar and the euro used in France: · Income growth higher in the United States than in France. · Inflation higher in France than in the United States. · A real interest rate higher in the United States than in France.

Correct Answer
verified
Income growth higher in the United State...
View Answer

Reduced U.S.tastes for European goods would the supply of euros and the demand for euros.

Correct Answer
verified

If the exchange rate between yen and dollars were 120 yen per dollar,when an American purchases a good valued at 600 yen,its cost in dollars would be:

Correct Answer
verified

Under a system of fixed exchange rates,what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

Correct Answer
verified
A nation whose currency is overvalued wi...
View Answer

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

Correct Answer
verified

Which of the following will create a demand for or a supply of currencies?

Correct Answer
verified

Under a system of flexible exchange rates,an increase in the foreign demand for the U.S.dollar in the foreign exchange market will cause the:

Correct Answer
verified

In foreign exchange markets,the effect of an increase in the supply of dollars on the value of the dollar is the same as that of:

Correct Answer
verified

If real interest rates in the United States fell and real interest rates in England rose,we would expect people to:

Correct Answer
verified

As the number of British pounds that exchange for a dollar rises on foreign currency markets:

Correct Answer
verified

Exam 29: International Finance

If the interest rates available on investments in two countries were the same,you would be less likely to invest in assets of the country:

Correct AnswerverifiedShow Answer

Because central banks intervene in currency markets,the term ____ has been used to describe the system.

Correct AnswerverifiedShow Answer

Suppose a video craze in the United States makes a particular Japanese-produced video game very popular.This would tend to:

Correct AnswerverifiedShow Answer

Stock in a German corporation can be purchased directly with currency from any other country.

Correct AnswerverifiedShow Answer

The dollar appreciates when U.S.demands for foreign currencies decrease.

Correct AnswerverifiedShow Answer

Exhibit 29-1 Refer to Exhibit 29-1.For Nation Z,the statistical discrepancy for the year 2011 equals:

Correct AnswerverifiedShow Answer

The recent flexible exchange rate system developed because of:

Correct AnswerverifiedShow Answer

It has become largely accepted since the end of the Bretton Woods agreement that:

Correct AnswerverifiedShow Answer

Explain how each of the following will affect the relative values of the dollar and the euro used in France: · Income growth higher in the United States than in France. · Inflation higher in France than in the United States. · A real interest rate higher in the United States than in France.

Correct AnswerverifiedIncome growth higher in the United State...View AnswerShow Answer

Reduced U.S.tastes for European goods would ____ the supply of euros and ____ the demand for euros.

Correct AnswerverifiedShow Answer

If the exchange rate between yen and dollars were 120 yen per dollar,when an American purchases a good valued at 600 yen,its cost in dollars would be:

Correct AnswerverifiedShow Answer

Under a system of fixed exchange rates,what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

Correct AnswerverifiedA nation whose currency is overvalued wi...View AnswerShow Answer

It is possible for the dollar to appreciate against the Japanese yen while depreciating against the British pound.

Correct AnswerverifiedShow Answer

Which of the following will create a demand for or a supply of currencies?

Correct AnswerverifiedShow Answer

Under a system of flexible exchange rates,an increase in the foreign demand for the U.S.dollar in the foreign exchange market will cause the:

Correct AnswerverifiedShow Answer

In foreign exchange markets,the effect of an increase in the supply of dollars on the value of the dollar is the same as that of:

Correct AnswerverifiedShow Answer

If real interest rates in the United States fell and real interest rates in England rose,we would expect people to:

Correct AnswerverifiedShow Answer

As the number of British pounds that exchange for a dollar rises on foreign currency markets:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Income growth higher in the United State...
View Answer

Reduced U.S.tastes for European goods would the supply of euros and the demand for euros.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A nation whose currency is overvalued wi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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