FINANCE 3325 EXAM#2 A) Past payment hisory B) C) Length of credit hisoy D All of the above 27) When the value of the British pound changes foms $1.50 o 1.25, te ound and the dolar has appreciated C) approciated; depreciatod 28) If the interest rate on foreign deposits increases, boilding everything else comstant A) the exxpected return on these deposits must also increase. B) the expected return on domestic deposits must decrease C) the expected returns on domestic deposits must increase. D) both A and B of the above. E) both A and C of the above 29) When the value of the dollar changes from 0.50 to 0.75, the pound as and the dollar has A) appreciated; appreciated B) depreciated; appreciated C) appreciated; depreciated D) depreciated; depreciated 30) Increased demand for a country's causes its currency to approciate in the long run, while increased demand for- causes its currency to depreciate. A) imports; imports B) imports; exports C) exports; imports D) exports; exports 31) The starting point for understanding how exchange rates are determined is a simple idea which states that if two countries produce an identical good, the price of the called good should be the same throughout the world no matter which co myproduces i A) Gresham's law B) the law of one price C) purchasing power parity D) arbitrage 32) When the central bank allows the purchase or sale of domestic currency to have an effect on the monetary base, it is called A) a sterilized foreign exchange intervention B) an unsterilized foreign exchange intervention