Exchange rate exit ticket

A country has a _________ exchange rate when the government keeps the exchange rate against some other currency at or near a particular target.

• Floating

• Fixed

• Flexible

• Stable

Fill in the blank. The definition of an exchange rate is the price of one currency in terms of another __________.

• Currency

• Good

• Cost

• Interest rate

• None of the answers

You are a UK business that exports to the US market. If the £1 goes from being equal to $1.25 to $1.50, what will happen to your exports to the US?

• Exports to US will become more expensive and decrease

• Exports to US will become cheaper and increase

• Exports to US will stay the same

• None of the answers

• Exports to US will become cheaper and decrease

How many Pesos would a person from Mexico need to trade for 20 USD? Hint: divide 20 USD by its exchange rate.

• 40 pesos

• 400 pesos

• 4 pesos

• 4000 pesos

Mark is traveling to Brazil from the U.S. Can Mark use USDs in Brazil?

• Yes

• No

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

• One side loses purchasing power and the other gains it

• Takes money away from one side and gives it to the other

• Causes war between the two countries

• One country's government introduces tariffs to protect local industries

What type of exchange rate system do most countries operate under?

• Flexible

• Floating

• Fictitious

• Fixed

Suppose that U.S. prices rise 4 percent over the next year while prices in Mexico rise 6 percent.

According to the purchasing power parity theory of exchange rates, which of the following

should happen?

• The dollar will depreciate

• The peso will be worth 1.5 dollars in the foreign exchange market

• The peso will depreciate

• The dollar will be worth 1.5 pesos in the foreign exchange market

You are a UK business that imports a lot of supplies from the US market. If the £1 goes from being equal to $1.25 to $1.50, what will happen to your imports from the US?

• Imports from the US will be more expensive and decrease

• Imports from the US will be cheaper and increase

• Imports from the US will stay the same

• None of the answers

The table gives the price of a paperback book as printed on its back cover.

What is needed to make a clear comparison of the price in the four countries?

• consumer price indices

• exchange rates

• indirect tax rates

• inflation rates