1. On March 31, 2021 in the foreign exchange market, one U.S. dollar was 110.00 Japanese yen (e = 110.00 /$). If the dollar depreciates by 2 percent against the yen during the 12 months following March 31, 2021, what would be the dollar-yen exchange rate on March 31, 2022?

a)120.0 /$.

b)112.2 /$.

c)112.0 /$.

d)108.0 /$.

e)107.8 /$.

2. On May 26, 2021 in the foreign exchange market, one euro was 1.23 U.S. dollar (e = 1.23$/). Exactly one year earlier on May 26, 2020 this exchange rate was e = 1.09$/. In that year,

a)the euro depreciated against the dollar by 14.0 percent.

b)the euro appreciated against the dollar by 14.0 percent.

c)the euro appreciated against the dollar by 12.8 percent.

d)the euro depreciated against the dollar by 12.8 percent.

e)the euro appreciated against the dollar by 11.4 percent.

f)the euro depreciated against the dollar by 11.4 percent.

3. In the situation described in Question 2, the price level in the U.S. economy had risen by 4.2 percent in the approximate period described in the question, while the corresponding figure for the Eurozone was 1.7 percent. Given this information, we can say that between May 26, 2020 and May 26, 2021, the real exchange rate of the euro, rounded to the whole percentage point, has appreciated against the dollar by

a)17 percent.

b)13 percent.

c)11 percent.

d)10 percent.

e)2 percent.

4. Questions' 2 and 3 settings are characterized by a change in the exchange rate from 1.09 U.S. dollars per Euro (e = 1.09$/) on May 26, 2020 to 1.23 U.S. dollars per Euro (e = 1.23$/) on May 26, 2021, as well as an increase in the price level in the U.S. economy of 4.2 percent and an increase in the price level of 1.7 percent in the Eurozone, which resulted in the overall appreciation of the real exchange rate of the Euro. You found the specific magnitude of this real exchange rate appreciation in Question 3. Given this information, we can say that compared to the US products, Eurozone products have become relatively more expensive

a)for Eurozone residents, but relatively more expensive for Americans.

b)only for people outside Eurozone and America.

c)for everyone around the world.

d)only for Eurozone residents.

e)only for Americans.

5. Peach Inc. manufactures farming equipment in the United States and exports some of its products to Canada. In the Canadian market, it competes with local firms and has to match their prices in Canadian dollars (C$). Suppose the Canadian market prices remain constant this year, but the Canadian dollar (C$) depreciates vis--vis the US$ by 3%. If Peach Inc. wants to remain as competitive in the Canadian market this year as it has been in the past price-wise, it must

a)lower the US$ price of its exports to Canada by more than 3%.

b)lower the US$ price of its exports to Canada by 3%.

c)keep the US$ price of its exports to Canada the same.

d)raise the US$ price of its exports to Canada by 3%.

e)raise the US$ price of its exports to Canada by more than 3%.