Foreign Exchange Markets/Exchange Rates (Macro 6.2-3)

Currency Exchanges are valued based on supply and demand.

• False

• True

If I am selling pineapples to people in Japan for them to make Hawaiian Pizza, when the US dollar depreciates, it is going to 

• hurt my business.

• help my business.

• not impact my business

• not enough information to answer the questions

What is the price of this soda in US dollars?

• $3

• .20 cents

• $2

• .90 cents

Another term for the equilibrium price on the foreign exchange market model is _______.

• exchange rate

• rate of returen

• current account

• foreign asset investment

• exchange market

On the displayed graph, with the case of a surplus, in the short-run, what will happen?

• The dollar will depreciate to the equilibrium exchange rate

• The dollar will apprecite to the equilibrium exchange rate

• The peso will depreciate to the equilibrium exchange rate

• The exchange rate will stay the same

Check ALL correct answers:

Which of the following supply shifters are impacted by BOTH monetary and fiscal policy?  

• domestic income levels

• foreign income levels

• Price levels

• foreign and domestic interest rates

• exchange rate

If you are comparing two currencies, if one appreciates the other will depreciate. 

• True

• False

With the US dollar depreicating as US Price Level increases, as happened after the COVID economic recovery, 

Mexican Imports from the US will _______

Mexican Exports to the US will _______

Demand for Mexican Pesos will ________

Supply of Mexican Pesos will __________

• Increase

  Decrease

  Increase

  Decrease

• Decrease

  Increase

  Decrease

  Increase

• Decrease

  Increase

  Increase

  Decrease

• Increase

  Decrease

  Decrease

  Increase