Q4 Ch 20 (10%) A country is always worse off when its currency is weak (falls in value). Is this statement true, false, or uncertain? Explain your answer.

Q5 Ch 20 (10%) a. A German sports car is selling for 70,000 euros. What is the dollar price in the United States of the German car if the exchange rate is 0.90 euro per dollar? b. If the Canadian dollar to U.S. dollar exchange rate is 1.28 and the British pound to U.S. dollar exchange rate is 0.62, what must be the Canadian dollar to British pound exchange rate?

Q7 Ch 21 (10%) If the Federal Reserve sells dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention, what will be the effect on international reserves, the money supply, and the exchange rate?

Q8 Ch 21 (10%) What would be the effect of a devaluation on a countrys imports and exports? If a country imports most of the goods included in the basket of goods and services used to calculate the CPI, what do you think the effect will be on this countrys inflation rate?

Q9 Ch 21 (10%) For each of the following, identify whether they increase or decrease the current account balance: a. An American citizens purchase of an airline ticket from Air France b. A Japanese citizens purchase of California oranges c. $50 million of foreign aid to Honduras d. A worker in California who sends money to his parents in Mexico e. The services an American accounting firm provides to a German firm