Question : 21) Currency traders expect the dollar to appreciate. What impact : 1244944

 

21) 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.

 

22) 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

23) 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.

 

24) 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.

 

25) 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.

 

26) 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.

27) An expansionary monetary policy in the United States should

A) decrease the foreign currency price of U.S. exports.

B) cause the dollar to appreciate.

C) decrease the dollar price of imports.

D) decrease net exports.

 

28) How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market?

A) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined.

B) The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined.

C) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase.

D) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase.

 

29) How will contractionary monetary policy in Japan affect the demand and supply of the yen in the foreign exchange market?

A) The demand for the yen will fall, and the supply of the yen will increase.

B) The demand for the yen will increase, and the supply of the yen will fall.

C) The demand for the yen will fall, and the supply of the yen will fall.

D) The demand for the yen will increase, and the supply of the yen will increase.

 

30) Which of the following will not shift the demand for the euro to the right?

A) an increase in interest rates in the European Union

B) an increase in incomes in countries that buy goods from the European Union

C) expectations among speculators that the price of the euro will rise in the future

D) a decrease in the demand for European goods

 

 

 

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