Question
If currency traders expect the value of the dollar to rise, what effect will this have on the demand for dollars and the supply of
If currency traders expect the value of the dollar to rise, what effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?
| a. | Demand for dollar will increase, and supply of dollars will remain constant | |
| b. | Demand for dollars will decrease, and supply of dollars will decrease | |
| c. | Demand for dollars will increase, and supply of dollars will increase | |
| d. | Demand for dollars will increase, and supply of dollars will decrease | |
| e. | Demand for dollars will decrease, and supply of dollars will increase |
Initially the exchange rate between the Australian dollar and yen is 80=A$1. Suppose that the exchange rate changes to 75 = A$1. Other things being equal, because of the change, __________.
| a. | Japan will import more Australian products | |
| b. | Japan will import less Australian products | |
| c. | Australia will import fewer Japanese products | |
| d. | Both (a) and (c) are correct correct | |
| e. | Both (b) and (c) are correct |
If a countrys current account has a $200 million surplus and its capital account balance has a $30 million deficit, then its financial account balance must have a _____________.
| $200 million deficit | ||
| $170 million deficit correct | ||
| $230 million deficit | ||
| $230 million surplus | ||
| $170 million surplus |
If currency traders expect the value of the dollar to rise, what effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?
| a. | Demand for dollar will increase, and supply of dollars will remain constant | |
| b. | Demand for dollars will decrease, and supply of dollars will decrease | |
| c. | Demand for dollars will increase, and supply of dollars will increase | |
| d. | Demand for dollars will increase, and supply of dollars will decrease | |
| e. | Demand for dollars will decrease, and supply of dollars will increase |
A countrys current account balance will deteriorate if ___________.
| a. | it receives more dividends from its overseas investments | |
| b. | it receives less dividends from its overseas investments | |
| c. | it pays less dividends to foreign investors | |
| d. | Both (a) and (c) are correct. | |
| e. | Both (b) and (c) are correct. |
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