Practice MCQ Questions and answers on Exchange-Rate Determination Mcqs

A. the value of other currencies will rise relative to the dollar

B. the dollar will depreciate relative to other currencies

C. the price of foreign goods will become cheaper to Canadians

D. the price of foreign goods will rise for Canadians

A. the United States being considered a safe haven by foreign investors

B. relatively high real interest rates in the United States

C. confidence of foreign investors in the U.S economy

D. relatively high inflation rates in the United States

A. an excess demand for that currency exists in the foreign exchange market

B. an excess supply of the currency exists in the foreign exchange market

C. the demand for foreign exchange shifts outward to the right

D. the demand for foreign exchange shifts backward to the left

A. large trade surpluses for the United States

B. high inflation rates in the United States

C. lack of investor confidence in U.S money policy

D. high interest rates in the United States

A. 200 pounds

B. 400 pounds

C. 600 pounds

D. 800 pounds

A. decrease the foreign demand for dollars causing the dollar to depreciate

B. decrease the foreign demand for dollars causing the dollar to appreciate

C. increase the foreign demand for dollars causing the dollar to depreciate

D. increase the foreign demand for dollars causing the dollar to appreciate

A. the inflation rate in each country will necessarily equal zero

B. the inflation rate in each country will necessarily equal 1 percent

C. the exchange rates are said to be fixed pegged to each other

D. purchasing power parity holds

A. purchasing power parity theory

B. asset markets theory

C. monetary theory

D. balance of payments theory