Question : 11) Refer to Figure 19-6.  Europe suffers a recession.   Assuming : 1267010

11) Refer to Figure 19-6.  Europe suffers a recession.   Assuming all else remains constant, this would be represented as a movement from ________.

A) D to A

B) C to D

C) B to C

D) A to D

E) A to B

12) Refer to Figure 19-6.  Currency speculators believe that the value of the euro will increase relative to the dollar.  Assuming all else remains constant, how would this be represented?

A) Supply would decrease, demand would decrease and the economy moves from B to C to D.

B) Supply would increase, demand would decrease and the economy moves from C to B to A.

C) Supply would decrease, demand would increase and the economy moves from A to D to C.

D) Supply would increase, demand would increase and the economy moves from D to A to B.

13) Refer to Figure 19-6.  Suppose that the U.S. government deficit causes interest rates in the United States to rise relative to those in the European Union.  Assuming all else remains constant, how would this be represented?

A) Supply would decrease, demand would decrease and the economy moves from B to C to D.

B) Supply would increase, demand would decrease and the economy moves from C to B to A.

C) Supply would decrease, demand would increase and the economy moves from A to D to C.

D) Supply would increase, demand would increase and the economy moves from D to A to B.

14) If there is currently a surplus of dollars, which of the following would you expect to see in the foreign exchange market?

A) The dollar will appreciate.

B) The dollar will depreciate.

C) There will be a decrease in the demand for dollars.

D) There will be a decrease in the supply of dollars.

15) Currency traders expect the dollar to appreciate.  What impact will this have on equilibrium in the foreign exchange market?

A) The dollar will appreciate, and the equilibrium quantity of dollars will decrease.

B) The dollar will depreciate, and the equilibrium quantity of dollars exchanged will decrease.

C) The dollar will appreciate, and the equilibrium quantity of dollars will increase.

D) The dollar will appreciate, and the change in the equilibrium quantity of dollars exchanged cannot be determined.

16) Which of the following would cause the dollar to appreciate?

A) an increase in the demand for dollars

B) a decrease in the demand for dollars

C) an increase in the supply of dollars

D) an increase in the demand for imports from foreign countries

17) An increase in the demand for American-made goods will

A) increase the supply of dollars on the foreign exchange market.

B) decrease the supply of dollars on the foreign exchange market.

C) increase the demand for dollars on the foreign exchange market.

D) decrease the demand for dollars on the foreign exchange market.

18) If the exchange rate changes from $2.00 = £1 to $2.01 = £1 then

A) the dollar has depreciated.

B) the dollar has appreciated.

C) the British pound has depreciated.

D) the British pound has stayed constant in value.

19) If the exchange rate changes from $1.45 = 1 euro to $1.37 = 1 euro, then

A) both the euro and dollar have appreciated.

B) both the euro and dollar have depreciated.

C) the euro has appreciated and the dollar has depreciated.

D) the euro has depreciated and the dollar has appreciated.

20) An increase in capital inflows will

A) increase net foreign investment.

B) increase capital outflows.

C) decrease capital outflows.

D) increase the equilibrium exchange rate.