As China's economy grows and the value of its currency, the Yuan, grows stronger, their goods and services are becoming less expensive for other countries. O True O False
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- If the U.S. dollar has fallen in comparison with foreign currencies, which of the following statements is TRUE? U.S. products cost more for foreign consumers. U.S. exports are likely to fall. Foreign currencies buy fewer U.S. dollars. U.S exports increase.If the Philippines peso strengthens against China’s yuan, then Filipinos will A. pay less to buy China's products B. pay more to buy China's products C. pay more to buy domestically produced products D. not be affected by the change in their currency's value.Those who say the growing current account deficit in the United States is not a significant problem make the argument that: 1.the current account deficit may hurt exporters, but American consumers gain as a result of lower relative prices. 2.the current account deficit is offset by an equally large capital account deficit, which ultimately leads to appreciation of the U.S. dollar. 3.the large current account deficit will ultimately lead to a current account surplus. 4.the increased investment in the United States as a result of the current account deficit will ultimately lead to increases in wealth and economic growth in the United States.
- If a central bank decreases interest rates, then gradually: a. the country's gross domestic product is likely to decrease. b. foreign exchange rate is likely to appreciate. c. demand for exported goods and services is likely to increase. d. flows of investment funds into the country are likely to decrease.Which would indicate that hyperinflation exists? a. Sales on credit are at lower prices than cash sales. b. Inflation is approaching or exceeds 20% per year. c. Monetary items do not increase in value. d. People prefer to keep their wealth in nonmonetary assets or a stable foreign currency.To force the value of the British pound to depreciate against the dollar, the Federal Reserve should: A. sell pounds for dollars in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market. B. sell dollars for pounds in the foreign exchange market and the Bank of England should sell pounds for dollars in the foreign exchange market. C. sell dollars for pounds in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market. D. sell pounds for dollars in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market.
- Investors from Japan, Philippines, and China frequently invest in each other based on prevailing interest rates. If China’s interest rates increase, Japanese investors are likely to buy ____ peso denominated securities, and the Chinese yuan is likely to ____ relative to the peso. A. more; depreciate B. more; appreciate C. fewer; depreciate D. fewer; appreciateAssume the New Taiwan dollar (NT$) value is tied to the Canadian dollar (CAD) and willremain tied to the Canadian dollar.Last month, a NT$ = 0.35 Singapore dollars. Today, a NT$ = 0.25 Singapore dollars. Assumethat there is much trade in the computer industry among Singapore, Taiwan, and Canada and thatall products are viewed as substitutes for each other and are of about the same quality. Assumethat the firms invoice their products in their local currency and do not change their prices.a. Will the computer exports from the Canada to Taiwan increase, decrease, or remain the same?Briefly explain. (2%)b. Will the computer exports from Singapore to the Canada increase, decrease, or remain thesame? Briefly explain.If China inflation suddenly becomes much higher than Philippines inflation, the Philippines demand for China goods will ____. In addition, the supply of China’s yuan to be sold for pesos will ____; both forces will place ____ pressure on the value of the yuan. A. increase; decline; upward B. increase; decline; downward C. decrease; increase; upward D. decrease; increase; downward
- If the income level in Mexico increases exponentially with stagnant growth in the U.S. income level would most likely lead to (assuming no change in interest rates or other factors) a ____ in Mexican demand for U.S. goods, and the Mexican peso should ____. A. decrease; depreciate B. increase; depreciate C. increase; appreciate D. decrease; appreciateIn the 1990s, Russia was attempting to import more goods but had little to offer other countries in terms of potential exports. In addition, Russia’s inflation rate was high. Explain the type of pressure that these factors placed on the ruble (Russian currency).When the euro rises and the dollar falls, foreign travel to Europe becomes cheaper for Americans. TRUE OR FALSE