Question :
19.3 Chapter Figures
The figure above shows the demand curve for : 1238298
19.3 Chapter Figures
The figure above shows the demand curve for dollars in the foreign exchange market.
1) If the exchange rate rises as shown by the arrow, the price of American exports to foreigners will be ________, and foreign nations will demand ________ dollars in order to buy ________ American exports.
A) cheaper; more; more
B) higher; more; more
C) cheaper; fewer; fewer
D) cheaper; fewer; more
E) higher; fewer; fewer
2) Which of the following factors could lead to an upward movement along the demand curve as indicated by the arrow?
i.an increase in the U.S. interest rate
ii.a decrease in the U.S. interest rate
iii.an increase in the expected future U.S. exchange rate.
A) i only
B) ii only
C) i and iii
D) ii and iii
E) None of the factors could lead to the upward movement illustrated by the arrow.
The figure above shows demand curves for dollars in the foreign exchange market.
3) The demand curve shifts rightward from D0 to D1 when the U.S. interest rate ________ and foreign interest rates are unchanged. The demand curve shifts rightward from D0 to D1 when the expected future exchange rate ________.
A) rises; falls
B) falls; rises
C) rises; rises
D) falls; falls
E) None of the above answers is correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.
4) Based on the figure above, which of the following factors could lead the demand curve to shift rightward from D0 to D1?
A) a rise in the U.S. exchange rate
B) a fall in the U.S. exchange rate
C) a rise in the U.S. interest rate
D) a fall in expected future U.S. exchange rate
E) a rise in foreign interest rates
5) Based on the figure above, which of the following factors could lead the demand curve to shift leftward from D0 to D2?
A) a rise in the U.S. exchange rate
B) a fall in the U.S. exchange rate
C) a rise in the U.S. interest rate
D) a rise in expected future U.S. exchange rate
E) a fall in foreign interest rates
6) Based on the figure above, which of the following factors could lead the demand curve to shift leftward from D0 to D2?
A) a rise in the U.S. exchange rate
B) a fall in the U.S. exchange rate
C) a rise in the U.S. interest rate
D) a fall in expected future U.S. exchange rate
E) a rise in foreign interest rates
The figure above shows the supply curve of dollars in the foreign exchange market.
7) If the exchange rate rises as shown by the arrow in the figure above, the price of imports coming into the United States will be ________, Americans will supply ________ dollars in order to get the foreign exchange to purchase ________ imported goods.
A) lower; fewer; more
B) higher; more; more
C) lower; fewer; fewer
D) lower; more; more
E) higher; fewer; more
The figure above shows supply curves of dollars in the foreign exchange market.
8) The supply curve shifts rightward from S0 to S2 when the U.S. interest rate ________ and foreign interest rates are unchanged. The supply curve shifts rightward from S0 to S2 when the expected future exchange rate ________.
A) rises; rises
B) rises; falls
C) falls; rises
D) falls; falls
E) None of the above answers is correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.
9) Based on the figure above, which of the following factors could lead the supply curve to shift rightward from S0 to S2?
A) a rise in the U.S. exchange rate
B) a fall in the U.S. exchange rate
C) a fall in the U.S. interest rate
D) a rise in expected future U.S. exchange rate
E) a fall in foreign interest rates
10) Based on the figure above, which of the following factors could lead the supply curve to shift leftward from S0 to S1?
A) a rise in the U.S. exchange rate
B) a fall in the U.S. exchange rate
C) a fall in the U.S. interest rate
D) a rise in expected future U.S. exchange rate
E) a rise in foreign interest rates
11) Based on the figure above, which of the following factors could lead the supply curve to shift leftward from S0 to S1?
A) a rise in the U.S. exchange rate
B) a fall in the U.S. exchange rate
C) a fall in the U.S. interest rate
D) a rise in expected future U.S. exchange rate
E) a fall in foreign interest rates
The figure above shows the market for foreign exchange in 2001 and 2009.
12) Which of the following could have led to the shifts illustrated in the figure above?
i.The U.S. exchange rate was expected to depreciate between 2001 and 2009.
ii.The U.S. exchange rate was expected to appreciate between 2001 and 2009.
iii.The U.S. interest rate rose relative to interest rates in other countries between 2001 and 2009.
A) i only
B) ii only
C) iii only
D) i and iii
E) ii and iii
13) Which of the following could have led to the shifts illustrated in the figure above?
i.The U.S. exchange rate was expected to depreciate between 2001 and 2009.
ii.The U.S. exchange rate was expected to appreciate between 2001 and 2009.
iii.The U.S. interest rate fell relative to interest rates in other countries between 2001 and 2009.
A) i only
B) ii only
C) iii only
D) i and iii
E) ii and iii
14) What would the Fed have done if it had tried to keep the exchange rate at its 2001 level?
A) buy dollars and sell euros
B) buy dollars and buy euros
C) sell dollars and buy euros
D) sell dollars and sell euros
E) None of the above is correct because the Fed cannot affect the exchange rate.
15) Suppose the Fed had tried to keep the exchange rate at its 2001 level. In that case the Fed would have ________ dollars and its foreign reserves would have ________.
A) bought; decreased
B) sold; decreased
C) bought; increased
D) sold; increased
E) None of the above is correct because the Fed cannot affect the exchange rate.
