1) If the euro faces a currency crisis with its value falling from $1.40 per euro to $1.20 per euro, who would benefit the most?

a) An American car manufacturer trying to export cars to Spain.

b) Universal Studios Orlando, which wants more European tourists to visit its theme parks.

c) The Brown family from Florida who plans to visit Paris next month.

d) Jared, an American investor who purchased a 10,000 euro bond last year.

2) Which of the following would cause a currency to depreciate in a flexible exchange rate market?

a) Rising domestic interest rates.

b) Reduced demand for imported goods.

c) Increased investment abroad.

d) A surge in foreign demand for a country's goods.

3) In which of the following pairs of countries is purchasing power parity more likely occur?

a) Thailand and Malaysia

b) China and France

c) The United States and Thailand

d) The United States and China

4) Suppose that Cambodia becomes the next popular tourist destination. You notice that hotels, restaurants, and other services cost much less there than in the United States. From the perspective of the U.S. dollar, what would be the real exchange rate of the Cambodian riel?

a) The real exchange rate would be 0.

b) The real exchange rate would be 1.

c) The real exchange rate would be greater than 1.

d) The real exchange rate would be less than 1.