An American traveling to Europe will find it easier to make purchases now because: a. Most countries in Europe accept U.S. dollars b. Most of the countries of Europe have adopted the British pounds as the standard currency c. Many of the countries in Europe now use the same currency, the euro d. All of the countries in Europe now use the same currency, the euro

An American traveling to Europe will find it easier to make purchases now because: a. Most countries in Europe accept U.S. dollars b. Most of the countries of Europe have adopted the British pounds as the standard currency c. Many of the countries in Europe now use the same currency, the euro d. All of the countries in Europe now use the same currency, the euro

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

A central bank can allow its currency to fall indefinitely, but it cannot allow its currency to rise indefinitely. Why not?
Why would a nation dollarizeâ€”that is, adopt another countrys currency instead of having its own?
What are some of the reasons a central bank is likely to care, at least to some extent, about the exchange rate?
It could be said that the USD dollar is most popular currency. There are some countries that have, in some way or another, adapted the USD. a. Identify a country that has gone through the dollarization process. b. How does a country become dollarized? Is there a process? Explain. c. Using examples specific to the country identified in "a," discuss TWO positive impacts and TWO negative impacts that dollarization could have/is having on the country.
3. Toyota manufactures most of the vehicles it sells in the United Kingdom in Japan. The baseplatform for the Toyota Tundra truck line is X1,650,000. The spot rate of the Japanese yen againstthe British pound has recently moved from X197/E to X190/E. How does this change the price of theTundra to Toyota's British subsidiary in British pounds?
5. In 1991 Argentina in an attempt to control the value of the Argentine peso fixed the value of the peso by adopting ______________________. a. a policy of Dollarization b. a currency board c. a floating rate currency d. the euro as the country’s currency
47. Every economy is striving hard to update and improve their paper currency to protect it from counterfeiters. Which government institutions are responsible for printing money? a. Trade Department b. Ministry of Finance c. Central bank d. Ministry of Coins
A European investor lives near one of his country’s borders. In Country A (where he lives), banks are offering an 8% interest rate and the inflation rate is 3%. Country B, on the other hand, has an inflation rate of 23%, and banks are offering 26% interest on deposits. a. What real or effective interest rate does the investor earn when investing in his own country? b. The investor believes that the currency of Country B will not change in its value relative to the value of the currency of Country A during this year. In which country would he get a larger effective interest rate? c. Suppose that he invests in a bank in Country B and that his prediction turns out to be wrong: the currency of Country B was devaluated 20% with respect to the exchange value of Country A’s currency. What effective interest rate would he obtain in this case?
The ECU as a basket of currencies. What is the percentage/weight of the ECU's total value accounted by the Spanish peseta? Refer to Exhibit 3.4 in the text. Would you get a different result if you valued the ECU in Japanese yen instead of the U.S. dollar? Would you expect this weight to change if the ECU depreciates by 10 percent against the U.S. dollar? For reference (image included)
1. When a central bank sterilizes a foreign exchange purchase, it offsets the purchase with a. an open market purchase to increase the money supply b. an open market sale to decrease the money supply c. an open market purchase to keep the money supply from changing d. an open market sale to keep the money supply from changing
28a. what is the primary monetary tool for USA? 28b. what is the primary monetary tool for all other countries? 28c. why the other countries cannot use the same primary monetary tool as the US?
The following are the items in the UK’s 2014 balance of payments (£ billions) Exports of goods............................................................................ 292.2 Exports of services.......................................................................... 215.0 Direct and portfolio UK net investment abroad ............................ –24.8 Reserves (adding to = –ve)............................................................... –7.1 Other (mainly short-term) financial inflows to UK.......................... 35.0 Other (mainly short-term) financial outflows from UK................. 100.3 Capital transfers to UK from abroad.................................................. 2.4 Capital transfers abroad from the UK................................................ 1.4 Net incomes and current transfers from/to abroad......................... –70.4 Imports of goods............................................................................ 413.4 Imports of…