Economic Questions, if you have time, explain why that's the answer:
7A. Assume the U.S. dollar and the Canadian dollar are traded in flexible currency markets. Which of the following would cause the U.S. dollar to depreciate relative to the Canadian dollar?
A. Higher price level in Canada relative to the United States.
B. Higher interest rates in the United States relative to Canada.
C. Lower interest rates in the United States relative to Canada.
D. Decreasing GDP in the United States than in Canada.
E. Increasing GDP in Canada relative to the United States.
7B. If an exchange rate is said to be floating, that means it is
A, set by the World Bank.
B. set by the government.
C. set by the market forces of supply and demand.
D. set by the International Monetary Fund.
E. set by individual banks.
7C. When the international value of the U.S. dollar increases,
A. Americans pay more for foreign goods.
B. the U.S. trade deficit decreases.
C. U.S. imports decrease.
D. Americans would demand less foreign currency.
E. U.S. exports decrease.
7D. Suppose interest rates fall in the United States, but they don’t fall in other nations. What is the impact on the flow of financial capital, the value of the U.S. dollar, and U.S. net exports (based on the changing value of the dollar)?
Capital Flow / Value of the U.S. dollar / Net Exports
A. Inflow / Appreciate / Increase
B. Inflow / Appreciate / Decrease
C. Outflow / Depreciate / Decrease
D. Outflow / Depreciate / Increase
E. Outflow / Appreciate / Decrease
7E. Which of the following would cause the U.S. dollar (USD) to appreciate as compared to the euro?
A. Interest rates in the United States decrease.
B. American consumers prefer to buy European goods.
C. European consumers boycott American goods.
D. GDP in the European Union decreases.
E. GDP in the European Union increases.
8A.
Which of the following would cause the U.S. dollar (USD) to depreciate as compared to the euro?
A. Interest rates in the United States decrease.
B. Interest rates in the European Union decrease.
C. Price levels in the European Union increase.
D. Price levels in the United States decrease.
E. GDP in the European Union increases.
8B. The U.S. dollar is currently trading for 7 pesos per dollar. If the exchange rate adjusts to 10 pesos per dollar then
A. the U.S. dollar has depreciated.
B. the U.S. dollar has appreciated.
C. the Mexican peso has appreciated.
D. both the Mexican peso and the U.S. dollar have appreciated.
E. both the Mexican peso and the U.S. dollar have depreciated.
8C. Suppose the United States and Brazil sign a free trade agreement. If real interest rates increase in the United States but not in Brazil, which of the following will be true of Brazilian capital flow, exports, and the value of the Brazilian real?
Capital Flow / Exports / Value of Brazilian Real
A.Inflow / Increase / Depreciate.
B. Inflow / Decrease / Appreciate.
C. Outflow / Increase / Appreciate.
D. Outflow / Decrease / Appreciate.
E. Outflow / Increase / Depreciate.
8D. Suppose Europeans began purchasing real assets in the United States. How would this impact the foreign exchange market for the euro and the U.S. dollar price of the euro?
Supply of euro / U.S. dollar Price of euro
A. Increase / Increase
B. Increase / Decrease
C. Decrease / Increase
D. Decrease / Decrease
E. Decrease/ Not Change
9. Suppose U.S. consumers decide they like foreign goods better than they like domestic goods. As a result of this change, which of the following is true?
I. The demand for the U.S. dollar will increase.
II. The demand for the U.S. dollar will decrease.
III. U.S. exports will increase as a result of the changing value of the U.S. dollar.
IV. U.S. exports will decrease as a result of the changing value of the U.S. dollar.
A. I only.
B. I and III only.
C. I and IV only.
D. II and IV only.
E. II and III only.
