Study Guides (400,000)
CA (150,000)
York (10,000)
ECON (900)
ECON 1010 (200)
Final

# ECON 1010 Study Guide - Final Guide: Foreign Exchange Market, The Foreign Exchange, Currency Appreciation And DepreciationExam

Department
Economics
Course Code
ECON 1010
Professor
Edward Haltrecht
Study Guide
Final

This preview shows pages 1-3. to view the full 34 pages of the document.
Chapter 25 The Exchange Rate and the Balance of Payments
25.1 The Foreign Exchange Market
1) Foreign currency is
A) the market for foreign exchange.
B) the price at which one currency exchanges for another currency.
C) foreign notes, coins and bank deposits.
D) foreign notes and coins only.
E) the purchasing power of foreign money.
Diff: 1 Type: MC
Topic: The Foreign Exchange Market
2) The foreign exchange market is
A) made up of importers, exporters, banks, international travellers, and specialist traders.
B) the place where people exchange the currencies of different countries.
C) the market in which more than \$600 trillion in foreign exchange is traded each year.
D) both A and C are correct.
E) both A and B are correct.
Diff: 1 Type: MC
Topic: The Foreign Exchange Market
3) The exchange rate is the
A) volume of currency exchanged between importers and exporters.
B) price at which one currency exchanges for another currency.
C) rate of currency appreciation or depreciation.
D) percentage change in the volume of currency exchanges.
E) average rate at which foreign currencies are exchanged.
Diff: 2 Type: MC
Topic: The Foreign Exchange Market
4) If the Canadian dollar depreciates, it means that
D) both A and C are correct.
E) all of the above are true.
Diff: 1 Type: MC
Topic: The Foreign Exchange Market

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

5) Suppose that the Canadian dollar exchanges for 1.05 U.S. dollars and also for 0.65 Euros. A
U.S. dollar exchanges for
A) 1.00 Euro.
B) 1.70 Euros.
C) 0.40 Euros.
D) 0.68 Euros.
E) 0.62 Euros.
Diff: 2 Type: MC
Topic: The Foreign Exchange Market
6) If the exchange rate is 97 U.S. cents per Canadian dollar, then
A) the Canadian dollar is cheaper than the U.S. dollar.
B) the U.S. dollar is more expensive than the Canadian dollar.
C) the Canadian dollar will appreciate.
Diff: 2 Type: MC
Topic: The Foreign Exchange Market
7) Currency depreciation is a reduction in the
A) precious metal content in coins, such as the replacement of silver with copper in quarters.
B) goods and services a currency can purchase within its own country, usually the result of a
period of inflation.
C) amount of foreign currency that can be obtained in trade for each unit of domestic currency.
D) amount of domestic currency that must be exchanged for a unit of foreign exchange.
E) amount of domestic goods foreign currency can purchase.
Diff: 1 Type: MC
Topic: The Foreign Exchange Market
8) Appreciation of a currency means
A) an increase in the amount of goods and services that currency can purchase within its own
country.
B) an increase in the precious metal content in coins.
C) a shortage of currency.
D) that currency can buy more foreign currency.
E) that currency can buy less foreign currency.
Diff: 1 Type: MC
Topic: The Foreign Exchange Market

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

9) Between 2002 and 2007, the Canadian dollar
A) depreciated against the U.S. dollar.
B) appreciated against the U.S. dollar.
C) remained constant against the U.S. dollar.
D) was not able to vary against the U.S. dollar, because the exchange rate was fixed against the
Japanese yen.
E) bought the same number of U.S. dollars as the Euro.
Diff: 1 Type: MC
Topic: The Foreign Exchange Market
10) The market in which the currency of one country is exchanged for the currency of another
country is the
A) money market.
B) capital market.
C) foreign exchange market.
D) forward exchange market.
Diff: 1 Type: MC
Topic: The Foreign Exchange Market
Refer to the table below to answer the following questions.
Table 25.1.1
Currency
2009 Exchange Rate
2010 Exchange Rate
EU euro
Japanese yen
2 euros/dollar
120 yen/dollar
3 euros/dollar
90 yen/dollar
11) Refer to Table 25.1.1. Between 2009 and 2010, the Canadian dollar ________ versus the
euro and ________ versus the yen.
A) appreciated; depreciated
B) appreciated; appreciated
C) depreciated; depreciated
D) depreciated; appreciated
E) not changed; not changed