COMM 220 FINAL questions with accurate
answers
An increase in the real exchange rate (real depreciation of domestic
currency) will result in: Ans✓✓✓ an increase in net exports.
When the real exchange rate increases (representing a real depreciation
of the domestic currency), it makes domestic goods relatively cheaper
for foreign buyers. This tends to make exports more attractive to foreign
consumers, resulting in an increase in exports. Simultaneously, it makes
foreign goods relatively more expensive for domestic consumers, which
could reduce the demand for imports.
Are U.S. companies that manufacture semi-conductors happier when the
dollar is strong or when it is weak? Ans✓✓✓ When the dollar is worth
less against other currencies, individuals using the dollar might find
foreign-made electronics relatively more expensive and might be more
inclined to buy American-made electronics, which may become
relatively more affordable for people from countries with stronger
currencies.
currency pegging Ans✓✓✓ Currency pegging is like tying the value of
one country's money to another country's money, or sometimes to a
group of currencies. It's a way for a country to keep its own currency's
value stable in relation to another currency or a set value.
For instance, a country might say, "Our money is always going to be
worth exactly this much compared to the U.S. dollar," or it might say,
"Our money is going to be worth a certain amount compared to a mix of
different currencies like the U.S. dollar, euro, and yen."
, Due to this change, the U.S. dollar will ________ the Canadian dollar
will _______ and the length of the effect will be _____________
Ans✓✓✓ The U.S. dollar appreciates and the Canadian dollar
depreciates. This is a long-run effect in part because the prices of goods
move gradually. The higher prices of goods in Canada could also be
caused by government policies such as tariffs and quotas.
Due to this change, the U.S. dollar will _________
the Canadian dollar will _______ and the length of the effect will be
__________ Ans✓✓✓ The U.S. dollar appreciates and the Canadian
dollar depreciates. Like the effects of interest rates, the effects of
expectations on exchange rates are short run. As everyone knows,
expectations could change swiftly and could reverse the course almost
instantaneously.
floating exchange rate regime Ans✓✓✓ In this system, the currency's
price is determined by how much people are willing to pay for it in the
global market, rather than being fixed or controlled by the government.
Determined by the foreign exchange market, depending on the relative
supply and demand of other currencies.
If the U.S. dollar depreciates in terms of the Euro: Ans✓✓✓ American
goods would be cheaper for Europeans.
In a fixed exchange rate system, how do countries address the problem
of currency market pressures that threaten to lower or raise the value of
their currency? Ans✓✓✓ If demand falls, then countries must increase
demand by buying up the excess supply with domestic currency.
answers
An increase in the real exchange rate (real depreciation of domestic
currency) will result in: Ans✓✓✓ an increase in net exports.
When the real exchange rate increases (representing a real depreciation
of the domestic currency), it makes domestic goods relatively cheaper
for foreign buyers. This tends to make exports more attractive to foreign
consumers, resulting in an increase in exports. Simultaneously, it makes
foreign goods relatively more expensive for domestic consumers, which
could reduce the demand for imports.
Are U.S. companies that manufacture semi-conductors happier when the
dollar is strong or when it is weak? Ans✓✓✓ When the dollar is worth
less against other currencies, individuals using the dollar might find
foreign-made electronics relatively more expensive and might be more
inclined to buy American-made electronics, which may become
relatively more affordable for people from countries with stronger
currencies.
currency pegging Ans✓✓✓ Currency pegging is like tying the value of
one country's money to another country's money, or sometimes to a
group of currencies. It's a way for a country to keep its own currency's
value stable in relation to another currency or a set value.
For instance, a country might say, "Our money is always going to be
worth exactly this much compared to the U.S. dollar," or it might say,
"Our money is going to be worth a certain amount compared to a mix of
different currencies like the U.S. dollar, euro, and yen."
, Due to this change, the U.S. dollar will ________ the Canadian dollar
will _______ and the length of the effect will be _____________
Ans✓✓✓ The U.S. dollar appreciates and the Canadian dollar
depreciates. This is a long-run effect in part because the prices of goods
move gradually. The higher prices of goods in Canada could also be
caused by government policies such as tariffs and quotas.
Due to this change, the U.S. dollar will _________
the Canadian dollar will _______ and the length of the effect will be
__________ Ans✓✓✓ The U.S. dollar appreciates and the Canadian
dollar depreciates. Like the effects of interest rates, the effects of
expectations on exchange rates are short run. As everyone knows,
expectations could change swiftly and could reverse the course almost
instantaneously.
floating exchange rate regime Ans✓✓✓ In this system, the currency's
price is determined by how much people are willing to pay for it in the
global market, rather than being fixed or controlled by the government.
Determined by the foreign exchange market, depending on the relative
supply and demand of other currencies.
If the U.S. dollar depreciates in terms of the Euro: Ans✓✓✓ American
goods would be cheaper for Europeans.
In a fixed exchange rate system, how do countries address the problem
of currency market pressures that threaten to lower or raise the value of
their currency? Ans✓✓✓ If demand falls, then countries must increase
demand by buying up the excess supply with domestic currency.
