Finance Flashcards

International Finance MC

If the currency speculators believe South Korea will have a much lower inflation in the future than the United States, then this event is most likely to cause the South Korean won to Appreciate and the US dollar to depreciate (if decr inflation rate then the currency will appreciate )
The US supply of Japanese yen is upsloping because of higher dollar price of yen means US goods are cheaper to the japanese
Assume that US and European governments adopt a system of flexible exchange rates. If more people in Europe decided to purchase US cars what effect will this have on the market of euros supply will increase
AN increase in the income of country A relative to the income of country B will usually lead to an increase in A’s demand for the currency of country B
If a financial portfolio manager in the US buys British company stocks in London Stock Exchange, this would involve a demand for British Pounds in the foreign exchange market
Which one of the following tools can the government not use to maintain a fixed exchange rate? -rationing of foreign exchange -controlling the flow of trade through various barriers-currency market intervention -keeping its level of international reserves strictly fixed keeping its level of international reserves strictly fixed
In a graph showing the market supply and demand for British Pounds in term of the US dollars, the demand for pounds curve is downsloping because more british pounds can be purchased if pounds become less expensive
When the exchange rate between pounds and dollars moves form $2=1 pound to $1=1 pound we say the dollar has appreciated
Which one of the following would not add to the demand for US dollars -foreign travel by US citizens -Travel by foreigners on US airlines -long term capital inflows-exports of commodities from the united states foreign travel by US citizens
If US citizens flock to canada for summer vacations and buy more canadian good and services then the the price of US dollars in canadian dollars will fall canadian dollars will be worth more than US dollars
US businesses are demanders of foreign currencies because they need them to pay for goods and services imported form foreign countries
US exports create a supply of foreign currencies and a demand for dollars in the foreign exchange market
If real interest rates rise in the UK relative to the US then this event is most likely to cause the british pound to depreciate and the US dollar to appreciate
Assume that D1 and S1 are the initial demand for and supply of dollar. The exchange rate will be $5 equals to 1 pound
Other things being equal which of the following is a necessary consequence of a depreciation of the US dollar against other currencies US exports will become cheaper relative to other nations products
Under a flexible exchange rate system, what will be the rate of exchange for one euro? eq Qeuro=300 price $.90 $1.10 $.9=1 euro –>convert 1 dollar equals how many euros .9x=1x=1/.9
Fixed exchange rates are often maintained by using all of the following except -international monetary reserves held by central banks -open speculation by individuals traders in foreign currency markets -domestic macroeconomic adjustments using monetary and fiscal policies -controls on imports and exports such as tariffs and quotas Open speculation by individual traders in foreign currency markets
In a graph showing the market supply and demand for british pounds in terms of US dollars the supply of pounds curve is upsloping because the British will purchase more US goods or services when the dollar price of the pound rises
With flexible exchange rates an increase in US interest rates can be expected to adversely affect US exporters
If a european importer can buy 10,000 for 11,100 euros the exchange rate for the euro is 1 euro=.90 dollars 10,000=11100divided by euros to get 1 euro
the equilibrium exchange rate between two currencies is determined by supply and demand in the foreign exchange markets
Under a system of flexible exchange rates the price of a pound will increase to $3 d1 moves right and price goes from 2 to 3
If canadian investors buy more US financial and real assets then the demand curve will shift right
To american buyers there is a decrease in the relative prices of japanese goods when the dollar appreciates

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