Question : 61) Exchange rate changes are A) not very volatile because of : 1228082

61) Exchange rate changes are

A) not very volatile because of offsetting changes in demand and supply.

B) very volatile because of government intervention in the market.

C) not very volatile because of government intervention.

D) very volatile because supply and demand changes reinforce each other.

E) infrequent because the exchange rate rarely changes.

62) In the foreign exchange market, the exchange rate is volatile because the

A) demand for dollars changes more frequently than the supply of dollars.

B) supply of dollars changes more frequently than the demand for dollars.

C) factors that influence the supply of dollars also influence the demand for dollars.

D) both the demand curve for dollars and the supply curve of dollars are very flat.

E) None of the above is related to the volatility of the exchange rate.

63) The exchange rate is volatile because

A) when a relevant factor changes, demand and supply tend to change in opposite directions.

B) when a relevant factor changes, demand and supply tend to change in the same direction.

C) the demand curve is vertical.

D) the supply curve is vertical.

E) the demand curve and the supply curve are horizontal.

64) The exchange rate can be very volatile, yet the quantity of dollars traded might not change much because

A) there is only limited quantity of dollars in the foreign exchange market.

B) the Fed is constantly intervening by buying and selling dollars.

C) supply of dollars and the demand for dollars often change in opposite directions.

D) supply of dollars and the demand for dollars often change in the same directions.

E) both the demand curve for dollars and the supply curve of dollars are horizontal.

65) In the foreign exchange market, an increase in the U.S. interest rate leads to ________ in the exchange rate because the supply of dollars ________.

A) rise; increases

B) rise; decreases

C) fall; increases

D) fall; decreases

E) no change; does not change

66) When the U.S. interest rate rises, the demand for U.S. dollars ________ and the exchange rate ________.

A) increases; rises

B) increases; falls

C) decreases; rises

D) decreases; falls

E) does not change; rises

67) If the U.S. interest rate differential falls, then the exchange rate ________.

A) definitely rises

B) definitely falls

C) does not change

D) falls only if it was the U.S. interest rate that changed

E) rises only if it was the foreign interest rate that changed

68) An increase in the U.S. interest rate relative to other countries will lead to ________ in the supply of dollars and a ________ in the exchange rate.

A) an increase; rise

B) an increase; fall

C) a decrease; rise

D) a decrease; fall

E) no change; rise

69) Yesterday, the dollar was trading in the foreign exchange market at 1.10 euros per dollar. Today, the dollar is trading at 1.05 euros per dollar. The dollar has ________ and a possible reason for the change is ________ in the U.S. interest rate.

A) appreciated; an increase

B) appreciated; a decrease

C) depreciated; an increase

D) depreciated; a decrease

E) depreciated; because there has been no change

70) Yesterday, the dollar was trading in the foreign exchange market at 1.10 euros per dollar. Today, the dollar is trading at 1.20 euros per dollar. The dollar has ________ and a possible reason for the change is ________ in the expected future exchange rate.

A) appreciated; an increase

B) appreciated; a decrease

C) depreciated; an increase

D) depreciated; a decrease

E) appreciated; because there has been no change