Exchange Rates

Who typically demands dollars in the Foreign Exchange Market?

• Americans

• Europeans

• Asians

• Australians

What happens to the dollar if there is an increase in demand for it?

• It stabilizes

• It depreciates

• It remains unchanged

• It appreciates

Which factor does NOT shift the Foreign Exchange Market?

• Interest rates

• Technological advancements

• Income levels

• Taste and preferences

What is the effect on the dollar if Europeans travel more to the United States?

• Fluctuation

• No change

• Appreciation

• Depreciation

What would likely happen if there is a recession in Europe?

• Dollar depreciates

• Euro appreciates

• Dollar appreciates

• Euro depreciates

How does inflation in the United States affect the dollar?

• Appreciates

• Fluctuates

• Depreciates

• Stabilizes

What is the result of higher relative interest rates in the United States compared to Europe?

• Dollar appreciates

• Euro depreciates

• Euro appreciates

• Dollar depreciates

What determines the price of one currency in terms of another?

• Real estate market
• Commodity market
• Supply and demand of the currencies

• Stock market

If Europeans are attracted to higher US interest rates, what will they likely do?

• 
  Buy more European bonds

• Invest in European markets

• 
  Convert Euros to USD to invest in US bonds

• Sell US assets

If Americans travel a lot to Europe, what will happen to the U.S. dollar?

• The value of the U.S. dollar will be tied to the Euro.
• The value of the U.S. dollar will increase.
• The value of the U.S. dollar will decrease.
• The value of the U.S. dollar will remain the same.