Fin 4604 Questions And Correct Answers
which would have the least direct influence on a countrys current account Tax on income
earned on foreign stocks.
income received by investors on previous investments in foreign financial assets (securities).
factor income
also known as central banks, it attempts to facilitate cooperation among countries with financial
crisis Bank for International Settlements (BIS)
not a factor that causes currency supply and demand schedules to change. Change in
exchange rates.
A large increase in the income level in Mexico along with no growth in the U.S. income level,
ceteris paribus, is expected to cause a/an _________ in Mexican demand for U.S. goods, and the
Mexican peso should ____________ Increase; depreciate
, Fin 4604 Questions And Correct Answers
An increase in U.S. interest (real) rates relative to German interest rates would likely
___________ the U.S. demand for euros and ____________ the supply of euros for sale.
Reduce; increase
If U.S. inflation suddenly increased while European inflation stayed the same, there would be:
An increased U.S. demand for euros and a decreased supply of euros for sale.
Assume that British corporations begin to purchase more supplies from the U.S. as a result of
several labor strikes by British suppliers. This action reflects: An increase in the supply of
British pounds for sale.
Assume that the U.S. places a strict quota on goods imported from China and that China does not
retaliate. Holding other factors constant, this event should immediately cause the U.S. demand
for Chinese Yuan to _____and the value of the Yuan to_____ Decrease; depreciate
Any event that increases the U.S. demand for euros should result in a (an) _________ in the
value of the euro with respect to ___________, other things being equal. Increase; U.S.
dollar
, Fin 4604 Questions And Correct Answers
Any event that reduces the supply of Swiss francs to be exchanged for U.S. dollars should result
in a (an) ___________ in the value of the Swiss franc with respect to ________, other things
being equal. Increase; U.S. dollar
A weak dollar is normally expected to cause: Low unemployment and high inflation in the
U.S.
A strong dollar is normally expected to cause: High unemployment and low inflation in
the U.S.
The interest rate of a country with a currency board: Will move in tandem with the interest
rate of the currency to which it is tied.
Assume a central bank exchanges (sells) its currency for other foreign currencies in the foreign
exchange market, but does not adjust for the resulting change in the money supply. This is an
example of: Non-sterilized intervention.
If the Fed desires to weaken the dollar without affecting the dollar money supply, it should:
Exchange (sell) dollars for foreign currencies, and sell equivalent value of its existing
Treasury Security holdings for dollars.
which would have the least direct influence on a countrys current account Tax on income
earned on foreign stocks.
income received by investors on previous investments in foreign financial assets (securities).
factor income
also known as central banks, it attempts to facilitate cooperation among countries with financial
crisis Bank for International Settlements (BIS)
not a factor that causes currency supply and demand schedules to change. Change in
exchange rates.
A large increase in the income level in Mexico along with no growth in the U.S. income level,
ceteris paribus, is expected to cause a/an _________ in Mexican demand for U.S. goods, and the
Mexican peso should ____________ Increase; depreciate
, Fin 4604 Questions And Correct Answers
An increase in U.S. interest (real) rates relative to German interest rates would likely
___________ the U.S. demand for euros and ____________ the supply of euros for sale.
Reduce; increase
If U.S. inflation suddenly increased while European inflation stayed the same, there would be:
An increased U.S. demand for euros and a decreased supply of euros for sale.
Assume that British corporations begin to purchase more supplies from the U.S. as a result of
several labor strikes by British suppliers. This action reflects: An increase in the supply of
British pounds for sale.
Assume that the U.S. places a strict quota on goods imported from China and that China does not
retaliate. Holding other factors constant, this event should immediately cause the U.S. demand
for Chinese Yuan to _____and the value of the Yuan to_____ Decrease; depreciate
Any event that increases the U.S. demand for euros should result in a (an) _________ in the
value of the euro with respect to ___________, other things being equal. Increase; U.S.
dollar
, Fin 4604 Questions And Correct Answers
Any event that reduces the supply of Swiss francs to be exchanged for U.S. dollars should result
in a (an) ___________ in the value of the Swiss franc with respect to ________, other things
being equal. Increase; U.S. dollar
A weak dollar is normally expected to cause: Low unemployment and high inflation in the
U.S.
A strong dollar is normally expected to cause: High unemployment and low inflation in
the U.S.
The interest rate of a country with a currency board: Will move in tandem with the interest
rate of the currency to which it is tied.
Assume a central bank exchanges (sells) its currency for other foreign currencies in the foreign
exchange market, but does not adjust for the resulting change in the money supply. This is an
example of: Non-sterilized intervention.
If the Fed desires to weaken the dollar without affecting the dollar money supply, it should:
Exchange (sell) dollars for foreign currencies, and sell equivalent value of its existing
Treasury Security holdings for dollars.
