currencies are exchanged

services are exchanged

goods are exchanged

capital is exchanged

2.The foreign exchange rate is defined as the (10 points)

price at which one currency exchanges for another

rate or the speed which the currencies of the world are traded

volume of the world currencies traded

None of the above

3.When a currency decreases in value relative to another currency the currency has (10 points)

depreciated

decelerated

appreciated

accelerated

4.Assume yesterday one U.S. dollar exchanged for 115 yen. Today the same dollar exchanges for 110 Yen. We can conclude that the (10 points)

dollar has appreciated relative to the Yen

dollar has depreciated relative to the Yen

Yen has appreciatied relative to the dollar

Both (b) and (c) are correct

5.When a currency depreciates, its value has (10 points)

remained constant against that of another country

fallen relative to another currency

risen relative to another currency

fluctuated around a particular value

6.When the U.S exports goods and services to France, there is an increase in the (10 points)

supply of dollars

supply of Euros

demand for dollars

both (b) and (c) are correct

7.In the Forex, which of the following increases the demand for dollars (10 points)

Japanese interest rates rise relative to the U.S. interest rates

the expected future exchange rate falls

the U.S. interest rate increases

both (a) and (c) are correct

8.Inflation rate in the U.S. is higher this year relative to the inflation rate in Europe. What happens to the value of the dollar in the Forex (10 points)

the dollar depreciates; the Euro appreciates

the dollar appreciates; the Euro depreciates

the dollar depreciates; the Euro depreciates

you can’t tell without knowing the inflation rates

9.Assume that GDP growth in Canda is higher than that of the U.S. GDP growth rate. What happens to the value of the Canadian dollar relative to the U.S. dollar (10 points)

Canadian dollar appreciates

Canadian dollar depreciates

the U.S. dollar appreciates

both (b) and (c) are correct

10.The Japanese develop a cure for baldness and that cure is only available in Japan. What happens to the value of the dollar relative to the Yen (10 points)

the dollar depreciates and the Yen appreciates

the dollar appreciates and the Yen appreciates

the dollar appreciates and the Yen depreciates

the dollar depreciates and the Yen depreciates