Currency Exchange Rates Paper 4


Two countries have flexible exchange rate systems and an active trading relationship. If incomes in Country 1, everything else being equal, then the currency of Country 1 will tend to relative to the currency of Country 2.
List A
List B


Which of the following changes would create pressure for the Japanese yen to appreciate relative to the U.S. dollar?


A company manufactures goods in Esland for sale to consumers in Woostland. Currently, the economy of Esland is booming and imports are rising rapidly. Woostland is experiencing an economic recession, and its imports are declining. How will the Esland currency, $E, react with respect to the Woostland currency, $W?


If the central bank of a country raises interest rates sharply, the country’s currency will likely


Over the past year, incomes in Russia have risen across the board. Today’s spot rate with respect to the U.S. dollar is $1 = 30 rubles. Which one of the following statements is consistent with these facts?


A fall in the demand for a country’s currency can be caused by any of the following except:


A shift of the demand curve for a country’s currency to the right could be caused by which of the following?


All of the following are trade-related factors affecting currency exchange rates except


The spot rate for the U.S. dollar is £0.6543, and the 60-day forward rate is £0.6521. The pound is selling at


The purchasing-power parity exchange rate


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