Political instability in the U.S. Select one: A. decreases the real interest rate and appreciates the real exchange rate. B. decreases the real interest rate and depreciates the real exchange rate. C. increases the real interest rate and appreciates the real exchange rate. D. increases the real interest rate and depreciates the real exchange rate.
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- If there is a decrease in the desire of Americans to purchase goods and services from other countries and put money in foreign banks and businesses then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would increase and the US dollar would appreciate. B. The equilibrium quantity of foreign currency would decrease and the US dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the US dollar would depreciate.Under a system of flexible exchange rates, what will correct a deficit in a country's balance of payments? a. an appreciation in the nation's currency b. a decline in the nation’s domestic price level c. a depreciation in the nation's currency d. an increase in the nation’s inflation rate 2. Which of the following would supply Canadian dollars to the foreign exchange market? a. an increase in the number of Canadians going to Las Vegas over the holidays b. an increase in spending due to American tourists in Canada c. the sale of a Canadian corporation to a German investor d. the sale of wheat from Manitoba to a European bakeryAs domestic currency appreciates, we would expect a. Trade deficit to decrease. b. Trade deficit to increase. c. Imports to decrease. d. Exports to increase.
- The economy of Singapore is experiencing high economic growth. How will this growth affect inflation and exchange rates? a. increase in inflation and a stronger currency b. lower inflation and a weaker currency c. increase in inflation and a weaker currency d. lower inflation and a stronger currencyDiscuss the Foreign Exchange Markets and its impact on the global economy.A low exchange rate results in Select one: a. The imports of a country increasing b. Cheaper imports c. A downward pressure on inflation d. Encourages foreign direct investment e. The exports of a nation becoming more competitive
- What is the relationship between the current account and the capital account in the balance of payments? Select one: a. The current account shows all income and expenditure and the capital account shows investment and how it is funded. b. The capital account shows how a current account deficit is funded or a surplus is disbursed. c. There is no relationship between them as they measure different things. d. The current account balance is the difference between exports and imports and the capital account balance shows net foreign income.Explain each of the ways government policymakers can respond to an overvalued A. devaluing the currency. B. restricting international transactions. C. increasing the official value of the currency. D. becoming a demander of the currency in the foreign exchange marketWithin the Eurozone, a country cannot change its exchange rate to re-establish the competitiveness of its exports. Adjustments have to work through: A. inflation and interest rates. B. Price and wages. C. Interest rates and budget deficits. D. Labour markets and interest rates.
- A negative value for the line item "Changes in official international reserves" in the balance of payments statement indicates that A. the Bank of Canada issued foreign exchange. B. the Bank of Canada used foreign exchange to buy Canadian dollars on the foreign exchange markets. C. the Bank of Canada increased its reserves of foreign exchange. D. the Bank of Canada sold off some of the gold that it uses to back the Canadian dollar.If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.Explain why you agree or disagree with the following statements:a. A country that grows faster than its major trading partners can expect the international value of its currency to depreciate.b. A nation whose interest rate is rising more rapidly than interest rates in other nations can expect the international value of its currency to appreciate.c. A country’s currency will appreciate if its inflation rate is less than that of the rest of the world.