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Home / Questions / An American good with a price tag of $89 costs 809 pesos. The exchange rate must be approx

An American good with a price tag of $89 costs 809 pesos. The exchange rate must be approx

An American good with a price tag of $89 costs 809 pesos. The exchange rate must be approximately

a.$11.00 = 1 peso

b.$0.11 = 1 peso

c.$0.89 = 1 peso

d.$0.09 = 1 peso

e.none of the above

 

 

 

72.Suppose there are only two countries in the world, Mexico and the United States. On the foreign exchange market, it follows that the

a.demand for pesos is linked to the demand for dollars.

b.demand for pesos is linked to the supply of pesos.

c.supply of pesos is linked to the demand for dollars

d.supply of pesos is linked to the supply of dollars.

e.none of the above

 

 

 

73.The answer is: "The price of one currency in terms of another currency." What is the question?

a.What is a foreign currency?

b.What is an exchange rate?

c.What is a flexible exchange rate system?

d.What is a fixed exchange rate system?

 

 

 

74.If, as a result of market forces, the dollar goes from a price of 11 pesos to 9 pesos, then the dollar has

a.appreciated.

b.been revalued.

c.been devalued.

d.depreciated.

e.There is not enough information to answer the question.

 

 

 

75.The answer is: "When the official price of a currency is lowered." What is the question?

a.What is overvaluation?

b.What is revaluation?

c.What is appreciation?

d.What is depreciation?

e.none of the above

 

 

 

76.There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. If the inflation rate in the United States rises relative to the inflation rate in Mexico, it follows that

a.the dollar will appreciate and the peso will depreciate.

b.both the dollar and the peso will appreciate, although the peso will appreciate before the dollar appreciates.

c.the dollar will depreciate and the peso will appreciate.

d.both the dollar and the peso will depreciate, although the peso will depreciate before the dollar depreciates.

e.There is not enough information to answer the question.

 

 

 

77.There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. An increase in income growth in Mexico relative to income growth in the United States will cause the

a.dollar to appreciate.

b.peso to depreciate.

c.dollar to depreciate.

d.a and b

e.There is not enough information to answer the question.

 

 

 

78.The purchasing power parity theory states that

a.exchange rates between any two currencies will adjust to reflect changes in the relative price level of the two countries.

b.exchange rates between any two currencies will adjust to reflect change in the relative income growth rates of the two countries.

c.the larger the economic growth rate in a country, the less likely its currency will depreciate in value.

d.exchange rates cannot be compared over time.

e.currencies appreciate as often as they depreciate.

 

 

 

79.There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. The real interest rate in the United States rises relative to the real interest rate in Mexico. It follows that

a.the dollar will depreciate and the peso will appreciate.

b.the peso will depreciate and the dollar will appreciate.

c.both the peso and the dollar are likely to appreciate.

d.both the peso and the dollar are likely to depreciate.

 

 

 

80.There is demand for and supply of dollars and a demand for and supply of pesos. Under a flexible exchange rate system, if income growth in the United States is greater than income growth in Mexico, then

a.the demand for dollars will shift to the right and the demand for pesos will shift to the left.

b.the demand for pesos will shift to the right and the supply of dollars will shift to the left.

c.the demand for pesos will shift to the left and the supply of pesos will shift to the right.

d.the supply of pesos will shift to the right and the supply of dollars will shift to the right.

e.none of the above

 

 

Dec 08 2019 View more View Less

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