Question

20. When a country's exchange rate depreciates, the price of: A: that country's goods abroad decreases B: that country's goods abroad increases C: foreign goods sold in the country increases D: that country's goods produced and sold locally increases 21. A central bank may seek to influence its country's currency by: A: imposing limits on the number of goods that may be imported B: restricting the outflow of funds from the home country C: intervening directly in the FX market to support the currency D: All of the above. 22. In a floating exchange rate regime, the exchange rate is the equilibrium price of the currency. Changes in supply for a currency will cause changes in the equilibrium exchange rate. All of these statements in relation to the AUD supply curve in the FX market are correct EXCEPT: A: for AUD holders, a rise in the price of foreign exchange means foreign currency priced goods, services and assets become cheaper B: the AUD supply curve is upward-sloping, reflecting the demand for foreign currency by AUD holders C: supply of AUD onto the FX market rises as holders of AUD buy foreign currency D: as the price of the AUD increases, the price of the foreign currency falls 23. If German demand for Australian exports increases at the same time that Australian productivity increases, relative to German productivity, then in the long run: A: the euro should appreciate, relative to the dollar B: the dollar should depreciate, relative to the euro C: the dollar should appreciate, relative to the euro D: it is uncertain whether the euro would appreciate or depreciate, relative to the dollar 24. In the long run, foreign exchange rates are determined by: A: agreement between governments of the major industrial countries B: economic fundamentals, such as productivity levels or price levels in different countries C: the difference between the short-term and long-term interest rates in each country D: the rate at which each country's currency can be exchanged for gold

Answer 1

1) :- it's answer is C because when exchange rate fall the domestic

Good And services price fall.

2) :-2:-) this question answer will be all of the above because central Bank used all above give techniques to influence country currency.

23 ) :- first one is correct answer because Euro should appreciate and relative to the dollar in given situation.

24) :- B is correct answer because in this Long run foreign exchange rate is determined by economic fundamentals such as productivity level of or price level in different countries.