Pearson 22 exchange rates

What happens when a nation’s currency depreciates?

• Its products become more expensive to other nations
• Its products become cheaper to other nations and exports may increases
• Nothing
• It halts all trade

Which of the following is NOT an argument in favor of protectionism?

• Protectionism shields infant industries from competition
• Protectionism safeguards workers’ jobs
• Protectionism promotes industries that are essential to national security
• Protectionism makes domestic firms more competitive in the long run

When Mataeo buys Euros through _________________________, he will use his U.S. dollars to pay for them.

• A. the foreign exchange market
• B. the currency exchange market
• C. a floating exchange market
• D. foreign currency market

If the U.S. government uses an expansionary monetary policy to reduce interest rates, then it will: 

• A. lead to higher imports and lower exports.
• B. cause the exchange rate for U.S. currency to depreciate.
• C. lower levels of consumption and investment.
• D. cause the exchange rate for U.S. currency to appreciate.

A stronger British pound is beneficial for:

• A. U.S. exchange students studying in Britain with a U.S. scholarship.
• B. British firms selling goods and services in Canada.
• C. British investors who have invested money in Australia.
• D. exchange students with a British scholarship studying in Canada

 A strong dollar leads to 

• cheaper imports.
• more expensive imports.
• no change in international prices.
• cheaper exports.

In the value of the currency of Country X depreciates, or lowers, the MOST LIKELY result is 

• Country X will increase imports and decrease exports
• The nation's imports are less expensive for domestic buyers
• The nation's exports are more affordable in the global market place
• The currency of Country X will be pegged, or fixed, instead of free-floating

What does a protective tariff seek to protect?

• Protectionists
• Free Trade
• Revenue
• Domestic Industries

Exchange rates among the currencies of the world change _____.

• Constantly
• Rarely
• Annually
• Slowly

An increase in the international value of the dollar (appreciation) would most likely benefit who the most?

• domestic producers who export
• citizens traveling or living abroad from the United States
• German citizens vacation in the U.S.
• Canadian citizen looking to buy property in the U.S.