SSEIN3 review: Exchange rates

Front

What is an exchange rate?

Back

The price of one nation's currency in terms of another's.

Front

According to the table, what is the Euro equivalent of 1 USD?

Back

.76 Euros

Front

How is an exchange rate determined in the money market?

Back

The forces of supply and demand

Front

Why do changing exchange rates help one country and hurt the other?

Back

One side loses purchasing power and the other gains it

Front

If the US $ were to appreciate in relation to the Euro, what effect would this have? Options: European consumers would have more purchasing power in US, US consumers can buy more European goods and services for fewer $$, US consumers can buy more English goods and services for fewer $$, European tourists to the US will spend more $$

Back

US consumers can buy more European goods and services for fewer $$

Front

If the Mexican Peso depreciates in relation to the Chinese Yuan, how is Mexico affected?

Back

Mexico has less purchasing power in Chinese currency

Front

A developing country’s two major sources of income from international trade are fishing and tourism. If the country’s exchange rate depreciated, what is likely to happen?

Back

The price of fish sold as exports would become cheaper.

Front

If the demand for British pounds increases,

Back

The dollar price of the British pound will increase.

Front

When a country's currency appreciates, the country's goods abroad become ________ expensive and foreign goods in the country become __________ expensive.

Back

more; less.

Front

When the exchange rate for the Mexican peso changes from 9 pesos to the dollar to 10 pesos to the dollar, then

Back

the peso has depreciated and the dollar has appreciated.