Assume that a Big Mac hamburger cost $3 in the United States 2 pesos in Mexico The implied purchasing power parity exchange rate between the peso and the dollar is ? A. 0.67 pesos = $1 B. 0.8 pesos =…
Due to Japan’s high saving rate, suppose that the Japanese invest abroad. This investment may result in a/an _______ of the Japanese yen and therefore a for Japan? A. appreciation; trade surplus B. appreciation; trade deficitC. depreciation; trade surplus D.…
Assume identical interest rates on comparable securities in the United States and foreign countries. Suppose investors anticipate that in the future the U.S dollar will depreciate against foreign currencies. investment funds would tend to ? A. flow from the United…
Starting from a position where the nation’s money demand equals the money supply and its balance of payments is in equilibrium its balance of payments would move into a surplus position if there occurred in the nation a (an) ?…
Which example of market expectations causes the dollar to appreciate against the yen– expectations that the U.S economy will have ? A. faster economic growth than JapanB. higher future interest rates than Japan C. more rapid money supply growth than…
Given a system of floating exchange rates falling income in the United States would trigger a (an) ? A. increase in the demand for imports and an increase in the demand for foreign currency B. increase in the demand for…
For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate…
If Japan runs current account deficit and exchange rates are floating? A. Japanese exports become more expensive to foreign buyersB. Japanese exports become less expensive for foreign buyers C. Japanese imports become less expensive for German buyers D. Japanese imports…
Suppose Canada and Switzerland were the only two countries in the world There exists an excess supply of Swiss francs on the foreign exchange market This suggests that ? A. the Canadian current account balance is in surplusB. the Swiss…
When the price of foreign currency (the exchange rate) is above the equilibrium level ? A. an excess supply of that currency exists in the foreign exchange market B. an excess demand for that currency exists in the foreign exchange…