Please see the attached file. Question are in there.
1. a. b. c. d. Which of the following is not an outcome when the U.S dollar strengthens or appreciates? The 'price' of the dollar increases relative to other currencies. The 'prices' of other currencies decrease relative to the dollar. U.S. imports increase. U.S. exports increase. 2. What happens to the exchange rate between the euro and the dollar (/$) if American preferences for German goods increase? a. The dollar will depreciate and the quantity of dollars exchanged will increase. b. c. d. 3. a. The dollar will appreciate and the quantity of dollars exchanged will decrease. The dollar will deprecate and the quantity of dollars exchanges will decrease. The dollar will appreciate and the quantity of dollars exchanged will increase. Why would a country want to impose an exchange rate ceiling? A strong currency encourages imports and can be used to fight inflation. b A weak currency will encourage exports and stimulate the economy. . c. A strong currency stimulates an economy. d A weak currency encourages imports and can be used to fight inflation. . 4. a. What is the difference between a floating and fixed exchange rate? A floating exchange rate is managed by a country's central bank while a fixed exchange rate is set by a country's government. b A floating exchange rate is managed by a country's central bank while a fixed exchange rate is set by supply and demand. . c. A floating exchange rate is set by a country's government and a fixed exchange rate is determined by supply and demand. d A floating exchange rate is set by supply and demand while a fixed exchange rate is set by a country's government. . 5. a. b. c. d. What kind of trade activity would occur if a worker in Taiwan can produce 8 PCs or 2 TVs in 8 hours, and a worker in Japan can produce 3 PCs or 6 TVs in 8 hours? Japan and Taiwan will both export TVs. There are incentives for Japan to export TVs and Taiwan to export PCs. There are incentives for Japan to export PCs and Taiwan to export TVs. Japan and Taiwan will both export PCs. 6. a. b. What would the Fed do (when managing the float of the U.S. dollar) if the value of the dollar rises above the target with the euro? Exchange the for the $ to cause the $ to appreciate. Increase the supply of dollars to cause the dollar to appreciate. Exchange the $ for the to cause the value of the euro to appreciate and the U.S. dollar to c. depreciate. d. 7. a. b. c. d. 8. a. b. c. d. 9. a. Decrease the demand for U.S. dollars. When would Americans be the most interested in buying a German-made product? If the exchange rate is $1 for 1. If the exchange rate is $1 for 0.50. If the exchange rate is $1 for 3. If the exchange rate is $1 for 2. Which of the following describes complete monetary policy to limit inflation? Interest rates increase and the dollar depreciates as the Federal Reserve System sells Treasury bills and euros. Interest rates decrease and the dollar appreciates as the Federal Reserve System buys Treasury bills and euros. Interest rates increase and the dollar appreciates as the Federal Reserve System sells Treasury bills and euros. Interest rates decrease and the dollar depreciates as the Federal Reserve System buys Treasury bills and euros. Which of the following is a reason why a rich, developed country may not benefit from free international trade? The country's currency may appreciate. b Companies may move to other countries where wages are lower and there is less regulation. . c. Inputs imported from other countries can't be obtained more cheaply. d The country's currency may depreciate. . 10. Why would the U.S. dollar depreciate when interest rates on U.S. government bonds decrease relative to interest rates on German government bonds? a. b. Because German and American investors will want to buy German bonds. Because German investors will want to buy German bonds and American investors will want to buy U.S. bonds. c. d. Because German and American investors will want to buy U.S. bonds. Because German investors will want to buy U.S. bonds and American investors will want to buy German bonds
