1. The ___________ for/of foreign currency in Japan is derived from the demand for ________ by Japanese consumers.

A. Supply, local products

B. Demand, Foreign products

2. When Americans want to purchase a Japanese product,

A. the Japanese money supply increases

B. The supply of yen rises

C. the demand for yen rises in U.S.

3. A higher nominal interest rate expected in one country indicates the fact that the country's currency under a freely floating exchange system would be expected to _________ against a currency with a lower expected interet rate.

A. Appreciate

B. Depreciate

4. Exchange rates depend the LEAST upon:

A. trade deficits

B. government tax policies

C. expected interest rates between nations

D. Expected inflation rates between nations