Homework Answers
24) C
Increase in demand for dollars appreciates dollar and depreciates euro.
25) D
Increase in supply of dollars leads to depreciation of dollar and appreciation of euro.
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S for Dollars Euros per Dollar D for Dollars Dollars 24) In the figure above, if...
The market for exchanging Dollars for Euros is in equilibrium. Nokia (a European company) invents a...
The market for exchanging Dollars for Euros is in equilibrium. Nokia (a European company) invents a new smartphone which, amazingly, everyone around the world (including people in the U.S.) wants to buy. Which of the following will occur? Group of answer choices The euro depreciates relative to the dollar. The dollar appreciates relative to the euro. The dollar depreciates relative to the euro. The dollar and the euro both depreciate.
Price (dollars per pizza) Quantity (millions of pizzas per year) In the above figure, the shift...
Price (dollars per pizza) Quantity (millions of pizzas per year) In the above figure, the shift in the supply curve from Sto S, reflects Select one: A. an increase in the supply of pizza. O B. an increase in the quantity of pizza supplied. O C . a decrease in the quantity of pizza supplied. O O D. a decrease in the supply of pizza E. None of the above answers is correct. Two brands of water, Natural Water and...
1. If euros sell for $ 1.50 ( U.S.) per euro, what should dollars sell for...
1. If euros sell for $ 1.50 ( U.S.) per euro, what should dollars sell for in euros per dollar? 2. Suppose that the exchange rate is 0.60 dollars per Swiss franc. If the franc appreciates 10% against the dollar, how many francs would a dollar buy tomorrow?
(16) When interest rates in the U.S. increase, the supply of dollars ________ and the demand...
(16)
When interest rates in the U.S. increase, the supply of dollars
________ and the demand for dollars ________.
decreases; increases
increases; decreases
increases; increases
decreases; decreases
(17)
The World Trade Organization
was established as part of the
Bretton Woods agreement.
requires members to charge the
same prices on goods traded internationally.
requires members to reduce
tariffs and eliminate non-tariff barriers.
is made up of business leaders
from all over the world.
(18)
If...
1. Suppose the European Central Bank (ECB)sells US dollars for euros in the FX market (direct...
1. Suppose the European Central Bank (ECB)sells US dollars for euros in the FX market (direct FX intervention). a. What would be the effect(s) in the market for euros (relative to the US dollar)? Increase in demand for euros Decrease in demand for euros Increase in supply of euros Decrease in supply of euros Why? b. Graphically illustrate the effect on the equilibrium exchange rate (dollars per euro). 2. Suppose that after conducting the FX intervention above, the ECB decides...
1. Suppose the dollar-euro exchange rate, Esle, are as follows: in New York, $1.2 per euro;...
1. Suppose the dollar-euro exchange rate, Esle, are as follows: in New York, $1.2 per euro; and in Paris, $1.3 per euro. (10 pts) a. Describe how investors use arbitrage to take advantage of the difference in exchange rates. (5 pts) b. Will this make euros appreciate or depreciate (against dollars) in Paris? Will this make euros appreciate or depreciate (against dollars) in New York? Under what conditions will the equilibrium be restored? Explain. (5 pts)
Question 8 1 pts Refer to the diagram. Suppose the U.S. increases its imports from Europe....
Question 8 1 pts Refer to the diagram. Suppose the U.S. increases its imports from Europe. All else equal, this would: $0.80 Quantity of Euros shift the demand curve to the left, causing the dollar to depreciate. shift the demand curve to the right, causing the dollar to depreciate shift the supply curve to the right, causing the dollar to appreciate. shift the supply curve to the left, causing the euro to appreciate.
Suppose the European Central Bank (ECB)sells US dollars for euros in the FX market (direct FX...
Suppose the European Central Bank (ECB)sells US dollars for euros in the FX market (direct FX intervention). What would be the effect(s) in the market for euros (relative to the US dollar)? Increase in demand for euros Decrease in demand for euros Increase in supply of euros Decrease in supply of euros Why? b. Graphically illustrate the effect on the equilibrium exchange rate (dollars per euro).
47. Suppose that the United States and European Union are the only trading partners in the...
47. Suppose that the United States and European Union are the only trading partners in the world. If interest rates in the United States are significantly lower than those in the European Union, we would expect the: O demand for the dollar to fall, depreciating the dollar. O supply of the dollar to fall, appreciating the dollar. O supply of euros to increase, depreciating the euro. O demand for euros to decrease, depreciating the euro. 48. Suppose that the United...
80. Assume that the euro is expected to appreciate by 4% annually against the U.S. dollar....
80. Assume that the euro is expected to appreciate by 4% annually against the U.S. dollar. If a U.S. company can borrow dollars for 9.3%, and is trying to minimize its expected financing cost, what is the highest interest rate it should be willing to pay to borrow euros? a. 8.9% b. 7.2% c. 4.3% d. 5.096% e. None of the above 81. Assume that the euro is expected to depreciate 4% annually against the U.S. dollar. If a U.S....
Price (dollars per pizza) Quantity (millions of pizzas per year) In the above figure, the shift in the supply curve from Sto S, reflects Select one: A. an increase in the supply of pizza. O B. an increase in the quantity of pizza supplied. O C . a decrease in the quantity of pizza supplied. O O D. a decrease in the supply of pizza E. None of the above answers is correct. Two brands of water, Natural Water and...
(16)
When interest rates in the U.S. increase, the supply of dollars
________ and the demand for dollars ________.
decreases; increases
increases; decreases
increases; increases
decreases; decreases
(17)
The World Trade Organization
was established as part of the
Bretton Woods agreement.
requires members to charge the
same prices on goods traded internationally.
requires members to reduce
tariffs and eliminate non-tariff barriers.
is made up of business leaders
from all over the world.
(18)
If...
1. Suppose the dollar-euro exchange rate, Esle, are as follows: in New York, $1.2 per euro; and in Paris, $1.3 per euro. (10 pts) a. Describe how investors use arbitrage to take advantage of the difference in exchange rates. (5 pts) b. Will this make euros appreciate or depreciate (against dollars) in Paris? Will this make euros appreciate or depreciate (against dollars) in New York? Under what conditions will the equilibrium be restored? Explain. (5 pts)
Question 8 1 pts Refer to the diagram. Suppose the U.S. increases its imports from Europe. All else equal, this would: $0.80 Quantity of Euros shift the demand curve to the left, causing the dollar to depreciate. shift the demand curve to the right, causing the dollar to depreciate shift the supply curve to the right, causing the dollar to appreciate. shift the supply curve to the left, causing the euro to appreciate.
47. Suppose that the United States and European Union are the only trading partners in the world. If interest rates in the United States are significantly lower than those in the European Union, we would expect the: O demand for the dollar to fall, depreciating the dollar. O supply of the dollar to fall, appreciating the dollar. O supply of euros to increase, depreciating the euro. O demand for euros to decrease, depreciating the euro. 48. Suppose that the United...
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