Chapter 11 & 12 Practice and Quiz Me Questions

International Finance (chapter 21)  4 What factors will shift the supply and demand for currency?

Give typing answer with explanation and conclusion One of the contentious issues between the US and China is the competitive devaluation of the currency. The value of countries' currencies has a significant impact on the economy. The import of products with comparatively low prices encourages currency devaluation in countries. Using what has just been declared, define what devaluation means and which countries have suffered the worst devaluation against the dollar after the 2022 pandemic. Include some factors to support your position. PLEASE ADD SOURCES TOO

15. Background information and a news article Does the exchange rate between the yen and the dollar affect prices and corporate profits? Should prices be in dollars per yen or yen per dollar? How do exchange rates affect exports to and from a country? The following 2017 article from Asian Review sheds light on these questions. Read the article and then answer the questions that follow. EXCHANGE RATES, PRICE INCREASES HOLD KEY TO PROFIT GROWTH IN JAPAN TOKYO - With earning season set to go into full swing next week, investors are paying attention to guidance for the current year. The following is what you should focus on to figure out if a company is expected to see net profits continue to grow in fiscal 2017. Assumed exchange rates can greatly change a company's earnings forecast. Analysts at Daiwa Securities, a brokerage, will mainly use a yen exchange rate of 115 to the dollar and 120 to the euro for fiscal 2017 earnings predictions. Using those rates, major companies' net profit…

A. Canada produces natural resources (coal, natural gas, and others), the demand for which has increased rapidly as China and other emerging economies expand. i. Explain how growth in the demand for Canada's natural resources would affect the demand for Canadian dollars in the foreign exchange market. Explain how the supply of Canadian dollars would change. ii. iii. Explain how the value of the Canadian dollar would change. iv. Illustrate your answer with a graphical analysis. 1

21. What does Foreign Exchange mean? Why do we see currency fluctuations?

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Question: "In a scenario where a country operates under a floating exchange rate system, what would likely be the effect of a significant increase in its central bank's interest rates on the country's current account balance? Assume other global economic conditions remain constant." a) The current account balance will improve due to increased foreign investment. b) The current account balance will deteriorate due to increased imports and decreased exports. c) The current account balance will improve due to decreased imports and increased exports. d) The change in interest rates will have no effect on the current account balance.

Answer last two questions

39. The ________ states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries.   Question 39 options:   a)  theory of purchasing power parity   b)  theory of money neutrality   c)  law of one price   d)  quantity theory of money

1. The principal function of the foreign exchange market is the transfer of funds, thus purchasing power, from one nation and currency to another. 2. If it takes 116.57 yen to buy one dollar, it takes $.0085785 to buy one yen. 3. Purchasing-power parity theory postulates that the change in the exchange rate between two currencies is proportional to the change in the ratio in the two countries' general price levels. 4. The price-specie-flow adjustment mechanism operates by the deficit nation losing gold and experiencing a reduction in its money supply. 5. Monetary policy is very effective under a fixed exchange rate policy. True or Falae

1. How would each of the following transactions show up on the U.S balance of payments accounts? Identify the current account balance, financial account balance, and reserve balance?  (a) An American company sells $30,000 worth of machinery to a British company. (b) an American woman visits her husband in Japan. She spends $5,000 in Japan before returning to the United States. (c) the US Red Cross sends $20,000 worth of flood-relief goods to Chile; (d) an American purchases $5,000 worth of French bonds; (e) a US bank lends $10,000 to a Canadian firm for 90 days.

( ) 14) According to the absorption approach what happens to China's trade balance following an increase in domestic spending ? 根据吸收论,中国国内支出增加对贸易余额将产生什么影响? A. becomes worse B. improves C. becomes unchangeable D. J curve ( ) 15) What happens to China's trade balance following an increase in income under the monetary approach? 根据货币论,中国的国民收入水平增加对贸易余额将产生什么影响? A. becomes worse B. improves C. becomes unchangeable D. J curve

When a country's currency appreciates, is this generally good news or bad news for a country's consumers? Is it generally good or bad news for the country's businesses? Explain your reasoning - try to use examples.

24. The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 10%. The current exchange rate for the Japanese yen (¥) is $0.0075. After supply and demand for the Japanese yen has adjusted in the manner suggested by purchasing power parity, the new exchange rate for the yen will be:

6. Monetary integration When two or more countries achieve monetary integration, the economies of the two countries use Which of the following are included in economist Robert Mundell's requirements for an optimal currency area? Check all that apply. Check all that apply. Capital mobility Labor mobility Strict immigration laws Coordinated fiscal policies Although the United States is one country, consider each of the 50 states in the United Stated as its own economy. For example, California would be considered one economy, while Nevada would be considered a separate economy. Use the following table to indicate whether these 50 separate state-level economies meet the conditions proposed by Rober Mundell. Condition Labor mobility Wage and price flexibility currency and have Yes No O O O

3. The international monetary system Aa Aa Until August 1971, industrialized countries around the world maintained a fixed exchange rate of their currencies with the U.S. dollar, which was linked to gold. The gold standardized system was called the Bretton Woods Fixed Exchange Rate System. This system collapsed in 1971, and since then, the dollar has not been linked to gold. Based on your understanding of the international monetary system, complete the following statements: A exchange rate is the quoted price for a unit of foreign currency to be delivered within a very short period of time. The government does not set a exchange rate, which means that supply and demand in the market determine the currency's value. • When American customers import more from Europe than they export to Europe, the euro relative to the dollar. • The of a currency refers to an increase or decrease of the stated par value of a currency whose value is fixed. Under a floating regime, supply and demand for the…

1-Purchasing Power Parity (PPP) theory refers to a. The concept that the same goods should sell for the same price across countries after exchange rates are taken into account b. The concept that interest rates across countries will eventually be the same c. The natural offsetting relationship provided by costs and revenues in similar market environments d. The orderly relationship between spot and forward currency exchange rates and the rates of interest between countries