If the United States imports more goods from abroad than it exports, thenforeigners will tend to have a surplus of U.S. dollars. What will this do tothe value of the dollar with respect to foreign currencies? What is the corresponding effect on foreign investments in the United States?

Q: Suppose that expectations are not taken into account and US investors shift their funds into Europe.…

A: An investor is defined as the person, which used to allocate the capital along with an expectation…

Q: A country’s current account position moves from a surplus to a deficit. What will be the result?…

A: Current Account Current Account means recording a nation’s transactions with the rest of the world.…

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A: Answer 1:The statement is a “valid” statement.Justification: The interest rate may comprise two…

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Q: What happens over time to the currencies of countries with higherinflation rates than that of the…

A: Currency exchange rate is the rate at which the currency of one country is traded for another…

Q: Assume that the U.S. income level rises at a much higher rate than does the Canadian income level.…

A: Following factors will affect the exchange rate: Inflation rate between the two countries. Interest…

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A: In 1990 Russia was more importing than exporting so there was tremendous pressure on Ruble currency.

Q: In order to reduce its current-account deficit, the United States would NOT do which of the…

A: The difference between the goods and services imported and exported is measured by current account…

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Q: Suppose a U.S. firm builds a factory in China, staffs it with Chinese workers, uses materials…

A: Exchange rate risks are the risks associated with changes in interest rates.

Q: Assume a Japanese firm is going to receive an amount of exports sales in U.S. dollars. Assume that…

A: The amount is to be received in US $ Then the amount is to be converted into Japanese Yen. If the US…

Q: the 1990s, Russia was attempting to import more goods but had little to offer other countries in…

A: in that Russia was facing financial crisis type of situation where there was no demand for Russian…

Q: Which of the following is a major benefit of international lending? It eliminates exchange rate risk…

A: Lending is a form of agreement in which one party agrees to allow the other party to use a sum of…

Q: What does it mean when it is said that the United States is running a trade deficit? Whatimpact will…

A: Interest Rate:   A rate at which a borrower is ready to pay and depositor is ready to receive the…

Q: When fewer units of the Japanese yen are required to buy one dollar, the foreign currency is said to…

A: Appreciation means an increase in the value of the currency, with respect to the other currency and…

Q: Given the interest rates in the U.S. and Canada are similar, if the Canadian dollar is expected to…

A: The above statement can be understood with an example below. Let suppose the exchange rate 1 US…

Q: e If the U.S. dollar appreciates relative to the MXN (Mexican peso) over time, the dollar cost to a…

A: Currency appreciation will impact on the export and import in export prices will increase but in…

Q: Other things being constant, if the U.S. real rate of interest exceeds that of its trading partners,…

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Q: If the Philippines peso strengthens against China’s yuan, then Filipinos will    A. pay less to…

A: Currency exchange refers to the amount of currency it would be required to acquire another currency.…

Q: Suppose the Japanese government pegs the yen to the U.S. dollar. What could the Japanese central…

A: Foreign exchange market is an institution for exchange of different currencies.

Q: A Canadian investor is considering investing in France. Use each of the following situation would…

A: UIP is the interest rate parity conditions the interest rate and exchange rate will move with each…

Q: When the value of the euro increases compared to the U.S. dollar, the price of U.S. exports to…

A: Appreciation of Currency refers to the increase in the value of a currency as compared to the other…

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Q: When the euro rises and the dollar falls, foreign travel to Europe becomes cheaper for Americans.…

A: Given, Euro Rises Dollar Falls

Q: Suppose that the Australian dollar is selling at a forward discount in the forward-exchange market.…

A: The foreign exchange market is defined as an over the counter or OTC global marketplace, which used…

Q: Assume that the yen is selling at a forward discount in the forward-exchange market. Then, most…

A: In exchange rate will be effected by interest rate prevailing in country of comparatives currencies.

Q: Under a floating exchange-rate system, an increase in the international demand for electronic…

A: The term exchange rate refers to the rate that is used to convert one currency into some other…

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A: The exchange rate is the rate at which one currency is exchanged for another. When one currency…

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A: An appreciation means an increase in the value of a currency against other foreign currency. An…

Q: If a U.S. firm desires to avoid the risk from exchange rate fluctuations, and it will need C$200,000…

A: The foreign exchange risk alludes to damage incurred by currency fluctuations in a global financial…

Q: he U.S. interest rate is higher than the U.K. interest rate, will the U.K. investors place…

A: Exchange rates are governed by the inflation and the interest rate and change according to that.