4. Chapter QuickQuiz Q4 If a nation's currency doubles in value on foreign exchange markets, the...
Which of the following will most likely cause a nation's currency to appreciate on the foreign exchange market? O a. A decrease in domestic interest rates O b. An increase in foreign interest rates O c. Stable domestic prices while the nation's trading partners are experiencing 10 percent inflation O d. Domestic inflation of 10 percent while the nation's trading partners are experiencing stable prices
1. If a nation's interest rates are relatively low compared to those of other countries, then the exchange value of its currency will tend to (C2)a. appreciate under a system of fixed exchange rates. b. remain constant.c. depreciate under a system of floating exchange rates. d. appreciate under a system of floating exchange rates. chooose a/b/c/d
What determines the exchange rate? If a nation's currency appreciates in the foreign market, how will this impact net exports? Explain.
1.With time, an appreciation in the value of the nation's currency in the foreign exchange market would cause A.the nation's imports to increase and exports to decline. B.the nation's exports to increase and imports to decline. C.both imports and exports to decline. D.both imports and exports to rise. 2. The short-run aggregate supply curve: A. has the same slope as the long-run aggregate supply curve (LRAS curve) B. shifts only when the long-run aggregate supply curve (LRAS curve) shifts in...
QUESTION1 10 points Saved When a nation's currency appreciates, it purchasesunits of a foreign currency and it is said to O fewer, strengthen. more; strengthen. O fewer; weaken. O more; weaken.
Does Currency Arbitrage Destabilize Foreign Exchange Markets?
An ___ reflects the amount of one currency required to purchase one unit of another currency. To put it simply, it is the ___ of foreign currency. This rate is set by ___ in foreign exchange markets. When a currency becomes more valuable in the market, this is called ___; when a currency becomes less valuable, this is called ___. possible answers: interest rate supply and demand exchange rate inflation rate price depreciation appreciation monetary policy
In the open-economy macroeconomic model, if there were a surplus in the market for foreign-currency exchange, the real exchange rate would appreciate. a. True b. False
1) The price of one currency in terms of another is called A) the exchange rate. B) purchasing power parity. C) the terms of trade. D) a currency band. 2) The three policies which cannot be maintained simultaneously by a nation (sometimes referred to as the "trilemma") do NOT include A) independent control of the money supply. B) independent control of fiscal policy. C) free flow of capital. D) fixed exchange rates 3) The foreign exchange rate refers to A) the rate of change in...
Theories of currency value 1.If a country’s financial markets are closed to foreign investors and the country does not permit its residents to invest in foreign markets, which theory of currency value would you rely on when trying to determine changes in the value of that country’s currency? Why? 2. If the country from the prior question opens its financial markets to foreign investors but continues to restrict foreign investment by its residents, how would you expect the value of...