ECON 340 EXAM 3 QUESTIONS WITH VERIFIED
ANSWERS
If the rate of exchange is €1 = US$2, then US$1 =
a. €2.
b. €0.50.
c. $2.00.
d. $0.50. - Answers - b. €0.50.
If the exchange rate is $1 = ¥110, a $20,000 Ford truck costs _____ in Japan.
a. ¥18,182
b. ¥3 million
c. ¥20,000
d. ¥2.2 million - Answers - d. ¥2.2 million
If the exchange rate is $1 = 12.95 Mexican pesos, then the price of a $10,000 Harley
Davidson motorcycle is_____ pesos in Mexico.
a. 772.2
b. 10,000
c. 12,950
d. 129,500 - Answers - d. 129,500
If the U.S. dollar changes from $1 = €1 to $0.80 = €1:
a. the dollar has depreciated relative to the euro.
b. the dollar has been fixed by the United States and the euro bloc.
c. the dollar has appreciated relative to the euro.
d. U.S. goods are now cheaper in the eurozone. - Answers - c. the dollar has
appreciated relative to the euro.
If the U.S. dollar changes from $1 = ¥200 to $1 = ¥100, then:
a. the dollar has appreciated relative to the yen.
b. U.S. goods are now more expensive in Japan.
c. the dollar has depreciated relative to the yen.
d. the dollar has been fixed by the United States and Japan. - Answers - c. the dollar
has depreciated relative to the yen.
If the value of a U.S. dollar changes from ¥120 to ¥110, it follows that:
a. U.S. goods become cheaper for Japanese consumers.
b. Japanese goods become cheaper for U.S. consumers.
c. U.S. services become more expensive for Japanese firms.
d. the yen is depreciating and the dollar is appreciating. - Answers - a. U.S. goods
become cheaper for Japanese consumers.
, When a currency appreciates, the prices of its exports to other countries will:
a. increase.
b. decrease.
c. remain constant.
d. fluctuate randomly. - Answers - a. increase.
When a currency appreciates, the prices of its imports from other countries will:
a. decrease.
b. increase.
c. remain constant.
d. fluctuate randomly. - Answers - a. decrease.
When a currency depreciates, the prices of its imports from other countries will:
a. increase.
b. decrease.
c. remain constant.
d. fluctuate randomly. - Answers - a. increase.
When a currency depreciates, the prices of its exports to other countries will:
a. decrease.
b. increase.
c. remain constant.
d. fluctuate randomly. - Answers - a. decrease.
Suppose that the value of the euro fell from $1.32 on April 30, 2012, to $1.24 on July 5,
2012. This implies that during this period the euro _____ and the dollar _____.
a. depreciated; appreciated
b. appreciated; depreciated
c. depreciated; fluctuated
d. appreciated; did not change - Answers - a. depreciated; appreciated
All other things being equal, if the economy of Europe expands rapidly and this
increases tourism dramatically in the United States, the:
a. U.S. dollar will appreciate.
b. euro will appreciate.
c. demand for the dollar will fall.
d. supply of the euro will fall. - Answers - a. U.S. dollar will appreciate.
In the foreign exchange market, when the demand for the euro increases, the
equilibrium U.S. dollar price of the euro _____ and the U.S. dollar _____.
a. rises; depreciates
b. falls; appreciates
c. falls; depreciates
d. rises; appreciates - Answers - a. rises; depreciates
If the supply of U.S. dollars in Britain increases, what does NOT occur?
ANSWERS
If the rate of exchange is €1 = US$2, then US$1 =
a. €2.
b. €0.50.
c. $2.00.
d. $0.50. - Answers - b. €0.50.
If the exchange rate is $1 = ¥110, a $20,000 Ford truck costs _____ in Japan.
a. ¥18,182
b. ¥3 million
c. ¥20,000
d. ¥2.2 million - Answers - d. ¥2.2 million
If the exchange rate is $1 = 12.95 Mexican pesos, then the price of a $10,000 Harley
Davidson motorcycle is_____ pesos in Mexico.
a. 772.2
b. 10,000
c. 12,950
d. 129,500 - Answers - d. 129,500
If the U.S. dollar changes from $1 = €1 to $0.80 = €1:
a. the dollar has depreciated relative to the euro.
b. the dollar has been fixed by the United States and the euro bloc.
c. the dollar has appreciated relative to the euro.
d. U.S. goods are now cheaper in the eurozone. - Answers - c. the dollar has
appreciated relative to the euro.
If the U.S. dollar changes from $1 = ¥200 to $1 = ¥100, then:
a. the dollar has appreciated relative to the yen.
b. U.S. goods are now more expensive in Japan.
c. the dollar has depreciated relative to the yen.
d. the dollar has been fixed by the United States and Japan. - Answers - c. the dollar
has depreciated relative to the yen.
If the value of a U.S. dollar changes from ¥120 to ¥110, it follows that:
a. U.S. goods become cheaper for Japanese consumers.
b. Japanese goods become cheaper for U.S. consumers.
c. U.S. services become more expensive for Japanese firms.
d. the yen is depreciating and the dollar is appreciating. - Answers - a. U.S. goods
become cheaper for Japanese consumers.
, When a currency appreciates, the prices of its exports to other countries will:
a. increase.
b. decrease.
c. remain constant.
d. fluctuate randomly. - Answers - a. increase.
When a currency appreciates, the prices of its imports from other countries will:
a. decrease.
b. increase.
c. remain constant.
d. fluctuate randomly. - Answers - a. decrease.
When a currency depreciates, the prices of its imports from other countries will:
a. increase.
b. decrease.
c. remain constant.
d. fluctuate randomly. - Answers - a. increase.
When a currency depreciates, the prices of its exports to other countries will:
a. decrease.
b. increase.
c. remain constant.
d. fluctuate randomly. - Answers - a. decrease.
Suppose that the value of the euro fell from $1.32 on April 30, 2012, to $1.24 on July 5,
2012. This implies that during this period the euro _____ and the dollar _____.
a. depreciated; appreciated
b. appreciated; depreciated
c. depreciated; fluctuated
d. appreciated; did not change - Answers - a. depreciated; appreciated
All other things being equal, if the economy of Europe expands rapidly and this
increases tourism dramatically in the United States, the:
a. U.S. dollar will appreciate.
b. euro will appreciate.
c. demand for the dollar will fall.
d. supply of the euro will fall. - Answers - a. U.S. dollar will appreciate.
In the foreign exchange market, when the demand for the euro increases, the
equilibrium U.S. dollar price of the euro _____ and the U.S. dollar _____.
a. rises; depreciates
b. falls; appreciates
c. falls; depreciates
d. rises; appreciates - Answers - a. rises; depreciates
If the supply of U.S. dollars in Britain increases, what does NOT occur?
