Question 1

Which of the following generates demand for foreign currencies?

Accepted Answer

A)  Exports from the United States to foreign countries.
B)  Imports of foreign goods by firms located in the United States.
C)  The building of plants by foreign corporations in the United States.D) A) and C)
E) None of the above

Question 2

A country could correct a balance-of-payments surplus by

Accepted Answer

A)  Expansionary fiscal policy.
B)  Decreasing the money supply.
C)  Increasing tariffs on imported goods.D) A) and B)
E) A) and C)

Question 3

In a fixed exchange rate system,

Accepted Answer

A)  Excess demand for a currency is eliminated by using foreign exchange reserves to increase demand.
B)  A country can eliminate a surplus of its currency by eliminating its protectionist barriers to trade.
C)  The capital account surpluses must offset current account deficits.D) B) and C)
E) A) and C)

Question 4

Which of the following is not likely to occur because of exchange rate fluctuations?

Accepted Answer

A)  An end to flexible exchange rates worldwide.
B)  A decrease in the demand for exports.
C)  An increase in the demand for imports.D) A) and C)
E) All of the above

Question 5

When foreigners buy U.S.dollars because they are a more stable currency than the currencies in their countries,they are generating a

Accepted Answer

A)  Demand for U.S.dollars and a demand for a foreign currency.
B)  Supply of U.S.dollars and a supply of a foreign currency.
C)  Demand for U.S.dollars and a supply of a foreign currency.D) All of the above
E) A) and B)

Question 6

One cartoon in the text shows a tourist on a far-off island saying,"How can I relax,knowing that out there,somewhere,somehow,someone's attacking the dollar?" Which of the following shifts in the foreign exchange market is the tourist concerned about?

Accepted Answer

A)  Leftward shift of supply and leftward shift of demand for the dollar.
B)  Leftward shift of supply and rightward shift of demand for the dollar.
C)  Rightward shift of supply and leftward shift of demand for the dollar.D) B) and C)
E) A) and C)

Question 7

Suppose a bottle of wine produced in France sells for 35 euros.If the exchange rate between euros and dollars is €1 = $1.30,how much will an American pay for the bottle of wine in America?

Accepted Answer

A)  $130.00.
B)  $35.00.
C)  $45.50.D) A) and C)
E) None of the above

Question 8

The article on China's $3 trillion of reserves indicates that the yuan's depreciation is due to

Accepted Answer

A)  Intervention of the Chinese government into the exchange markets to purchase yuan.
B)  Intervention of the Chinese government to purchase dollars to suppress the yuan.
C)  Intervention of the U.S.government to cause the dollar to depreciate.D) All of the above
E) B) and C)

Question 9

There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except

Accepted Answer

A)  Uncertainty for people who invest in world markets.
B)  The return to a worldwide gold standard.
C)  A change in the price of exports.D) A) and B)
E) A) and C)

Question 10

Excess demand for a specific foreign currency,such as the pound,implies a

Accepted Answer

A)  Capital account surplus for the United States.
B)  Capital account deficit for the United States.
C)  Balance-of-payments deficit for the United States.D) A) and C)
E) B) and C)

Question 11

A major problem with managed exchange rates is

Accepted Answer

A)  A constant excess supply of U.S.dollars.
B)  The steady depletion of foreign exchange reserves.
C)  The determination of the value of a particular currency and which country will maintain that value.D) B) and C)
E) None of the above

Question 12

Suppose a men's suit produced in Moldavia sells for 250 euros.If the exchange rate between euros and dollars is €1 = $1.38,how much will an American pay for the suit?

Accepted Answer

A)  $345.00.
B)  $181.16.
C)  $250.00.D) None of the above
E) A) and B)

Question 13

The U.S.demand for foreign currency arises from speculation and the

Accepted Answer

A)  U.S.demand for foreign goods,services,and financial assets.
B)  Foreign demand for U.S.goods,services,and financial assets.
C)  Foreign demand for U.S.holdings of gold.D) A) and B)
E) A) and C)

Question 14

5 fewer yuan for the domestic money supply.

Accepted Answer

When the Chinese central bank sells Yuan...

Question 15

State the case for and the case against currency bailouts.

Accepted Answer

The case for a currency bailout rests on...

Question 16

A good time for an American to hold German stocks,ceteris paribus,is when the

Accepted Answer

A)  Euro is stable compared to the U.S.dollar.
B)  U.S.dollar depreciates in value compared to the euro.
C)  U.S.dollar appreciates in value compared to the euro.D) None of the above
E) All of the above

Question 17

The supply of U.S.dollars is determined by all of the following except

Accepted Answer

A)  Foreign demand for American exports.
B)  American demand for imports.
C)  American investments in foreign nations.D) A) and C)
E) All of the above

Question 18

Yesterday the exchange rate was €1 = $1.30,and today it is €1 = $1.35.In this case the dollar has appreciated.

Accepted Answer

A) True 
 B)False

Question 19

Use a model of the dollar-euro foreign exchange market to illustrate how the value of the dollar is determined in terms of the euro.Identify two factors that would increase the value of the dollar in terms of the euro.

Accepted Answer

See Figure 36.1 in your text for the mod...

Question 20

A result of the Asian Crisis of 1997-1998 was

Accepted Answer

A)  An increase in the value of the U.S.dollar relative to Southeast Asian currencies.
B)  A major increase in the level of U.S.exports to Southeast Asia.
C)  Political stability in many Southeast Asian countries.D) B) and C)
E) A) and C)

Exam 36: International Finance

Which of the following generates demand for foreign currencies?

Correct AnswerverifiedShow Answer

Excess demand for a specific foreign currency,such as the pound,implies a

Correct AnswerverifiedShow Answer

Which of the following is not likely to occur because of exchange rate fluctuations?

Correct AnswerverifiedShow Answer

A country could correct a balance-of-payments surplus by

Correct AnswerverifiedShow Answer

The U.S.demand for foreign currency arises from speculation and the

Correct AnswerverifiedShow Answer

Yesterday the exchange rate was €1 = $1.30,and today it is €1 = $1.35.In this case the dollar has appreciated.

Correct AnswerverifiedShow Answer

A major problem with managed exchange rates is

Correct AnswerverifiedShow Answer

A result of the Asian Crisis of 1997-1998 was

Correct AnswerverifiedShow Answer

The article on China's $3 trillion of reserves indicates that the yuan's depreciation is due to

Correct AnswerverifiedShow Answer

There is resistance to exchange rate fluctuations because changes in the value of a currency are likely to cause all of the following except

Correct AnswerverifiedShow Answer

Use a model of the dollar-euro foreign exchange market to illustrate how the value of the dollar is determined in terms of the euro.Identify two factors that would increase the value of the dollar in terms of the euro.

Correct AnswerverifiedSee Figure 36.1 in your text for the mod...View AnswerShow Answer

A good time for an American to hold German stocks,ceteris paribus,is when the

Correct AnswerverifiedShow Answer

5 fewer yuan for the domestic money supply.

Correct AnswerverifiedWhen the Chinese central bank sells Yuan...View AnswerShow Answer

Suppose a men's suit produced in Moldavia sells for 250 euros.If the exchange rate between euros and dollars is €1 = $1.38,how much will an American pay for the suit?

Correct AnswerverifiedShow Answer

Suppose a bottle of wine produced in France sells for 35 euros.If the exchange rate between euros and dollars is €1 = $1.30,how much will an American pay for the bottle of wine in America?

Correct AnswerverifiedShow Answer

State the case for and the case against currency bailouts.

Correct AnswerverifiedThe case for a currency bailout rests on...View AnswerShow Answer

In a fixed exchange rate system,

Correct AnswerverifiedShow Answer

When foreigners buy U.S.dollars because they are a more stable currency than the currencies in their countries,they are generating a

Correct AnswerverifiedShow Answer

One cartoon in the text shows a tourist on a far-off island saying,"How can I relax,knowing that out there,somewhere,somehow,someone's attacking the dollar?" Which of the following shifts in the foreign exchange market is the tourist concerned about?

Correct AnswerverifiedShow Answer

The supply of U.S.dollars is determined by all of the following except

Correct AnswerverifiedShow Answer

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See Figure 36.1 in your text for the mod...
View Answer

Correct Answer
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When the Chinese central bank sells Yuan...
View Answer

Correct Answer
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The case for a currency bailout rests on...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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