Which type of money is most likely to see its value fluctuate in the foreign exchange market? O a. fiat money O b. commodity money O c. price-indexed money O d. pegged-exchange rate
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Which type of money is most likely to see its value fluctuate in the foreign exchange market?
O a. fiat money
O b. commodity money
O c. price-indexed money
O d. pegged-exchange rate
Step by step
Solved in 3 steps
- Suppose that the Bank of Canada sells 100 million euros from its foreign exchange reserves, and that the exchange rate is $1.50 Canadian per euro. The Canadian money supply will O Fall by $100 million O Fall by $150 million O Rise by $160 million O Rise by $16 million Now suppose that the Bank of Canada does not want the money supply to change. What would it need to do to sterilize its foreign exchange market operation? O Buy Canadian government bonds O Sell more from its foreign exchange reserves O Buy foreign government bonds Save & ContinueWhich of the following are the major players in the foreign exchange market? O a. Corporates O b. Commercial banks O C Exchange brokers O d. Central bank of the countryThe evolution of the payments system from barter to commodity money, then to fiat money, then to electronic money can best be understood as a consequence of: O a. government regulations designed to improve the efficiency of the payments system O b. competition among firms to make it easier for customers to purchase their products O c. government regulations designed to promote the safety of the payments system. O d. innovations that reduced the costs of exchanging goods and services.
- Your friend visited the country of Sibelia. He reports to you that one can always legally exchange 1 euro for exactly 2.50 Sibelian dollars. What type of exchange rate system does Sibelia most probably have? O A Hard peg. O B. Managed float. O C. Free float. O D. Soft peg.According to purchasing power parity, when a country's central bank decreases the money supply, a unit of money O A. gains value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy. B. gains value in terms of the domestic goods and services it can buy, but loses value in terms of the foreign currency it can buy. O C. loses value in terms of the domestic goods and services it can buy, but gains value in terms of the foreign currency it can buy. D. loses value both in terms of the domestic goods and services it can buy and in terms of the foreign currency it can buy.A car costs $20,000 in the U.S. The exchange rate between the euro and the dollar is 0.813 euros per dollar. Ignoring transportation and other similar costs, what would be the euro price of the same car in France? Select one: O a. 28,000 euros O b. 16,260 euros O c. 24,600 euros O d. 15,300 euros Check
- Under a fixed exchange rate system (A). would be an exogenous monetary policy instrument, whereas under a flexible exchange rate system (B) endogenous monetary policy instrument. would be an O a. (A) the interest rate; (B) the exchange rate O b. (A) the exchange rate; (B) the interest rate O c. (A) the interest rate; (B) the interest rate O d. (A) the exchange rate; (B) the exchange rateDollar/euro exchange rate, E Retum on dollar deposits Expected return on euro deposits Rates of retum (in dollar terms) L(R Yus) MUs Pus U.S. real money supply (increasing) U.S. real money holdings Given the graph above, an increase in the US money supply causes Lütfen birini seçin: O A. a fall in the euro interest rate O B. a rise in the dollar interest rate O C. the dollar to appreciate O D. value of the dollar to stay constant O E. the dollar to depreciateHow can a commercial bank "create" money? Select one: O a. by making loans O b. by increasing the rate of inflation O c. by issuing its own Central Bank bonds O d. by selling government Treasury bills to the commercial banks O e. by selling some of its foreign-currency reserves for domestic currency
- e. None of the above O d. Interest rates in the foreign country go up O c. Interest rates in the foreign country go down O b. Interest rates in the home country go down Interest rates in the home country go up O a. EH/F: of home country currency per 1 unit of foreign country currency What wo happ if prices in the home country (H) stay unchanged and prices in the foreign country (F) go down? Use he nterest arity ondition nd he aw f ne rice o nswer uestions o 4. ооAn individual in the England wants to buy office equipment from England which costs $2,000. If the exchange rate is 1pound=$1.9, how much will the office equipment cost him in pounds? O a. 2,000 pounds b. 1,800 pounds c. 3,800 pounds O d. 1,053 poundsWhat is the impact of a relatively high inflation rate in the domestic country on the foreign exchange rate? O a. Continuous fluctuation in domestic currency O b. No change in the value of domestic currency O C. Decrease in the value of home currency O d. Increase in the value of home currency