Course: International investment

objective questions

7. If U.S. demand for Japanese goods increases and Japan's demand for U.S. products also rises at the same time, which of the following can you conclude in this situation?

A. The U.S. dollar will appreciate against the yen

B. The U.S. dollar will depreciate against the yen.

C. The U.S. dollar will not change relative to the yen

D. The U.S. dollar may appreciate, depreciate, or remain unchanged against the yen

8. Which of the following features are NOT shared by independent floating exchange rate system? ( )

A. The exchange rates are determined by the market forces

B. The exchange rates may change minute by minute

C. The central bank has to maintain large quantities of foreign exchange reserves.

D. The central bank can pursue desired monetary policy

9. A country that regulates the rate at which its currency is exchanged for all other

currencies is considered to have a ( ) exchange rate system

A. fixed or managed B. floating or flexible C. currency board

D. dollarization

10. The trade deficit means that ( )

A. residents are importing more goods than they are exporting

B. residents are borrowing more funds than they are lending

C. residents are receiving more payments than they are making

D. residents are producing more goods than they are consuming