EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Question
Chapter 34, Problem 6MCQ
To determine
The reason for the increase in supply of the U.S. dollar in the foreign exchange market.
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You own a local company. In the past year, you successfully expanded your sales market into Europe, and you now have profits and
cash denominated in euros. You want to convert the euros to your home country currency to repatriate the profits and pay taxes. You are
a. not required to convert the euros to the home currency to pay taxes.
b. a demander of the euro in the foreign exchange market.
c. a supplier of your home country's currency in the foreign exchange market.
d. a demander of your home country's currency in the foreign exchange market.
If the U.S. interest rates fall relative to foreign interest rates
O capital flows out of the United States into other countries increase.
the U.S. imports rise.
the U.S. dollar appreciates.
capital flows into the United States from other countries increase.
View the data below for the exchange rate between the US dollar and the Japanese yen.
How many yen could you get per dollar at the earliest date shown on the chart? Explain.
How many yen could you get per dollar at the most recent date shown on the chart? Explain.
Has the dollar appreciated or depreciated in value over time? Explain.
Chapter 34 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 34 - Prob. 1SPPACh. 34 - Prob. 2SPPACh. 34 - Prob. 3SPPACh. 34 - Prob. 4SPPACh. 34 - Prob. 5SPPACh. 34 - Prob. 6SPPACh. 34 - Prob. 7SPPACh. 34 - Prob. 8SPPACh. 34 - Prob. 9SPPACh. 34 - Prob. 10SPPA
Ch. 34 - Prob. 1IAPACh. 34 - Prob. 2IAPACh. 34 - Prob. 3IAPACh. 34 - Prob. 4IAPACh. 34 - Prob. 5IAPACh. 34 - Prob. 6IAPACh. 34 - Prob. 7IAPACh. 34 - Prob. 8IAPACh. 34 - Prob. 1MCQCh. 34 - Prob. 2MCQCh. 34 - Prob. 3MCQCh. 34 - Prob. 4MCQCh. 34 - Prob. 5MCQCh. 34 - Prob. 6MCQCh. 34 - Prob. 7MCQCh. 34 - Prob. 8MCQ
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- 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:arrow_forwardPrices in Country A sharply rose due to a supply shortage and led to high levels of inflation in the economy. What effect is this price increase likely to have on domestic currency in the foreign exchange market? Country A's domestic currency will see an appreciation, in relation to currencies of other trading partners. Country A's domestic currency will see both appreciation and depreciation, in relation to currencies of other trading partners. Country A's domestic currency will see no change, in relation to currencies of other trading partners. Country A's domestic currency will see a depreciation, in relation to currencies of other trading partners. There is insufficient information to draw a conclusion.arrow_forwardAll foreign transactions are denominated in the foreign currency of concern. This firm would ____ a stronger dollar and would ____ a weaker dollar. be unaffected by; benefit from be unaffected by; be adversely affected by benefit from; be unaffected by benefit from; be adversely affected byarrow_forward
- please quickly thanks !arrow_forwardAn increase in U.S. imports from Mexico will cause the demand for pesos in the foreign exchange market to. 34.2arrow_forwardDisplay graphically changes in the value of domestic currency, if foreign consumers develop stronger preferences for some kind of domestic goodsarrow_forward
- Currency traders expect the value of the U.S. dollars to fall by yearend. What effect will this have on the demand and supply of dollars in the foreign exchange market? Support your answer.arrow_forwardThe yen has been depreciating relative to the U.S. dollar in recent weeks due to which of the following: Relatively lower interest rates in the U.S. Relatively higher inflation in Japan Expansionary monetary policy in the U.S. O Higher global oil prices QUESTION 6 The daily transaction value in the international FX market is roughly equivalent to that of the NYSE True False QUESTION 7 The Chinese renminbi is currently pegged to the U.S. dollar. True False QUESTION 8 Monetary policy and exchange rate targeting could be combined to accomplish all of the following except Increase a central bank's creditability Decrease the incidence of speculative attacks Increase a currency's value Decrease a currency's valuearrow_forwardThe___________exchange rate between the currencies of two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country's currency will purchase ______________quantity of goods and services in the second country as it does in the first. purchasing power-parity (PPP), the same purchasing power-parity (PPP), a larger market, the same market, a smallerarrow_forward
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