Exchange-Rate Determination

Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?

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Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?

A. anticipate the dollar to depreciate against the euro
B. anticipate the dollar to appreciate against the euro
C. anticipate the dollar’s exchange rate against the euro to remain constant
D. have no anticipation concerning future movements in the dollar/euro exchange rate

Suppose that rising U.S income leads to higher sales and profits in the United States This would likely result in ?

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Suppose that rising U.S income leads to higher sales and profits in the United States This would likely result in ?

A. increasing portfolio investment into the United States
B. decreasing portfolio investment into the United States
C. increasing direct investment into the United States
D. decreasing direct investment into the United States

Starting from a position where the nation’s money demand equals the money supply and its balance of payments is in equilibrium economic theory suggests that the nation’s balance of payments would move into a surplus position if there occurred in the nation a (an) ?

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Starting from a position where the nation’s money demand equals the money supply and its balance of payments is in equilibrium economic theory suggests that the nation’s balance of payments would move into a surplus position if there occurred in the nation a (an) ?

A. increase in the money demand
B. decrease in the money demand
C. increase in the money demand
D. None of the above

Which example of market expectations causes the dollar to depreciate against the yen – expectation that the U.S economy will have ?

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Which example of market expectations causes the dollar to depreciate against the yen – expectation that the U.S economy will have ?

A. faster growth than Japan
B. higher future interest rates than Japan
C. more rapid money supply growth than Japan
D. lower inflation rates than Japan

Under a system of floating exchange rates relatively high productivity and low inflation rates in the United States results in a (an) ?

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Under a system of floating exchange rates relatively high productivity and low inflation rates in the United States results in a (an) ?

A. increase in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
B. increase in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar
C. decrease in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
D. decrease in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar

Under a system of floating exchange rates relatively low productivity and high inflation rates in the United States results in a (an) ?

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Under a system of floating exchange rates relatively low productivity and high inflation rates in the United States results in a (an) ?

A. increase in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
B. increase in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar
C. decrease in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar
D. decrease in the demand for foreign currency and increase in the supply of foreign currency and a appreciation in the dollar

Given a system of floating exchange rates rising income in the United States would trigger a (an) ?

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Given a system of floating exchange rates rising income in the United States would trigger a (an) ?

A. increasing in the demand for imports and an increasing in the demand for foreign currency
B. increase in the demand for imports and decrease in the demand for foreign currency
C. decrease in the demand for imports and an increase in the demand for foreign currency
D. decrease in the demand for imports and a decrease in the demand for foreign currency

For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent the above variables would cause investment funds to flow from ?

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For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent the above variables would cause investment funds to flow from ?

A. the United States to Switzerland causing the dollar to depreciate
B. the United States to Switzerland causing the dollar to appreciate
C. Switzerland to the United States causing the franc to depreciate
D. Switzerland to the United States causing the franc to appreciate