Chap021 Essay

6762 WordsDec 25, 201428 Pages
Chapter 21: International Finance Multiple Choice Questions EXCHANGE RATES: THE GLOBAL LINK 1. The exchange rate is the: A) Opportunity cost at which goods are produced domestically. B) Balance-of-trade ratio of one country to another. C) Price of one country's currency expressed in terms of another country's currency. D) Amount of currency that can be purchased with 1 ounce of gold. Answer: C Type: Complex Understanding Page: 437 2. An exchange rate is: A) Always fixed. C) The price of one currency in terms of another. B) Tied to the price of gold. D) All of the above. Answer: C Type: Basic Understanding Page: 437 FOREIGN-EXCHANGE MARKETS 3. The U.S. demand for foreign currency…show more content…
dollars and a demand for a foreign currency. C) Demand for U.S. dollars and a supply of a foreign currency. D) Demand for U.S. dollars and a demand for a foreign currency. Answer: B Type: Basic Understanding Page: 437 13. Changes in the value of the euro affect the economies of: A) Only those countries using the euro as currency. B) All European countries but there would be no significant impact on countries outside Europe. C) Potentially the entire world. D) There would be no significant impact on any economies as long as exchange rates are flexible. Answer: C Type: Basic Understanding Page: 437 14. When the exchange rate between the U.S. dollar and the Japanese yen is $1=100 yen, this is an indication that: A) It would take 100 yen to purchase $1. C) The dollar is depreciating compared to the yen. B) The yen is stronger than the U.S. dollar. D) All of the above. Answer: A Type: Basic Understanding Page: 438 15. A change in the exchange rate for a country's currency alters the prices of: A) Exports only. C) Both exports and imports. B) Imports only. D) Only domestic goods and services. Answer: C Type: Basic Understanding Page: 438 16. An increase in the price of the U.S. dollar in terms of euros will cause, ceteris paribus: A) A lower European inflation rate. B) Higher interest rates in the United States. C) European goods to be cheaper to residents of the United States. D) All of the

    More about Chap021 Essay

      Open Document