FIN 6420 CH 4 | ACE EVERY QUIZ | CONFIDENCE
BACKED BY ACCURACY!
Which of the following situations is most likely to strengthen the yen's value against the
dollar? Assume everything else is held constant.
A. A reduction in US inflation accompanied by an increase in US interest rates
B. A reduction in Japan's inflation accompanied by an increase in Japan's interest rates
C. A reduction in US inflation accompanied by an increase in Japan's inflation
D. An increase in US inflation accompanied by no change in US nominal interest rates -
Answer: a reduction in Japan's inflation accompanied by an increase in Japan's interest
rates
If a country experiences low inflation relative to the United States, its exports to the
United States should ____, and there is ____ pressure on its currency's equilibrium
value.
A. Decrease; downward
B. Decrease; upward
C. Increase; downward
D. Increase; upward - Answer: increase; upward
If inflation in New Zealand suddenly increased while U.S. inflation stayed the same,
there would be:
A. An inward shift in the demand schedule for NZ$ and an outward shift in the supply
schedule for NZ$
B. An outward shift in the demand schedule for NZ$ and an inward shift in the supply
schedule for NZ$
C. An outward shift in the demand schedule for NZ$ and an outward shift in the supply
schedule for NZ$
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
, D. An inward shift in the demand schedule for NZ$ and an inward shift in the supply
schedule for NZ$ - Answer: an inward shift in the demand schedule for NZ$ and an
outward shift in the supply schedule for NZ$
Assume that the British government eliminates all controls on imports by British
companies. Other things being equal, the US demand for pounds would ____, the
supply of pounds for sale would ____, and the equilibrium value of the pound would
____.
A. Increase; increase; increase
B. Decrease; increase; decrease
C. Remain unchanged; increase; decrease
D. Remain unchanged; increase; increase - Answer: remain unchanged; increase;
decrease
If the United States experiences a sudden surge in inflation and a surge in interest rates
while Japanese inflation and interest rates remain unchanged, the value of the
Japanese yen will ____ against the US dollar
A. Appreciate
B. Depreciate
C. Remain unchanged
D. Cannot be determined from the information provided - Answer: cannot be
determined from the information provided
The supply curve for a currency is downward sloping since US corporations would be
encouraged to purchase more foreign goods when the foreign currency is worth less.
T/F? - Answer: FALSE
The value of euro was $1.30 last week. During last week the euro depreciated by 5%.
What is the value of euro today?
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
BACKED BY ACCURACY!
Which of the following situations is most likely to strengthen the yen's value against the
dollar? Assume everything else is held constant.
A. A reduction in US inflation accompanied by an increase in US interest rates
B. A reduction in Japan's inflation accompanied by an increase in Japan's interest rates
C. A reduction in US inflation accompanied by an increase in Japan's inflation
D. An increase in US inflation accompanied by no change in US nominal interest rates -
Answer: a reduction in Japan's inflation accompanied by an increase in Japan's interest
rates
If a country experiences low inflation relative to the United States, its exports to the
United States should ____, and there is ____ pressure on its currency's equilibrium
value.
A. Decrease; downward
B. Decrease; upward
C. Increase; downward
D. Increase; upward - Answer: increase; upward
If inflation in New Zealand suddenly increased while U.S. inflation stayed the same,
there would be:
A. An inward shift in the demand schedule for NZ$ and an outward shift in the supply
schedule for NZ$
B. An outward shift in the demand schedule for NZ$ and an inward shift in the supply
schedule for NZ$
C. An outward shift in the demand schedule for NZ$ and an outward shift in the supply
schedule for NZ$
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
, D. An inward shift in the demand schedule for NZ$ and an inward shift in the supply
schedule for NZ$ - Answer: an inward shift in the demand schedule for NZ$ and an
outward shift in the supply schedule for NZ$
Assume that the British government eliminates all controls on imports by British
companies. Other things being equal, the US demand for pounds would ____, the
supply of pounds for sale would ____, and the equilibrium value of the pound would
____.
A. Increase; increase; increase
B. Decrease; increase; decrease
C. Remain unchanged; increase; decrease
D. Remain unchanged; increase; increase - Answer: remain unchanged; increase;
decrease
If the United States experiences a sudden surge in inflation and a surge in interest rates
while Japanese inflation and interest rates remain unchanged, the value of the
Japanese yen will ____ against the US dollar
A. Appreciate
B. Depreciate
C. Remain unchanged
D. Cannot be determined from the information provided - Answer: cannot be
determined from the information provided
The supply curve for a currency is downward sloping since US corporations would be
encouraged to purchase more foreign goods when the foreign currency is worth less.
T/F? - Answer: FALSE
The value of euro was $1.30 last week. During last week the euro depreciated by 5%.
What is the value of euro today?
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
