6.1-6.2
6.3-6.4
6.5-6.6
Random
100
What does it mean when currency appreciates?
the currency becomes more valuable
100
What is the foreign exchange market?
Interaction of buyers and sellers exchanging the currency of one country for the currency of another
100
according to this chart, where are we going to see more capital inflows to?
United States
100
what are the 3 raider goals? name all of them
thinker, communicator, contributor
200
10 years ago, 1 dollar gets you 100 yen. Now, 1 dollars you 160 yen. Did the yen appreciate or depreciate?
the yen depreciated
200
What is the difference between a fixed exchange rate and a floating exchange rate?
Floating exchange rate is when government lets market determine the exchange rate while fixed exchange rate is when the government manipulates the exchange rate.
200
according to this, what is going to happen to exports? what about imports?
Exports will decrease and imports will increase
200
What is 1 of the 4 costs that come with a fixed exchange rate?
1. large reserves of foreign currency
2. limits flexibility of monetary policy
3. distorts incentives4. increases red tape and corruption
300
Current Account (CA) + Financial Account (FA) = what?
0. What ever comes in, must come out.
300
What is one benefit of fixed exchange rates? (there are 2)
1. reduces certainty of international trade
2. curbs tendency towards inflationary policies
300
according to this chart, is real interest rate going to increase or decrease?
Increase!
300
according to this chart, is aggregate demand going to increase or decrease? How do we know?
Decrease.
Aggregate demand can be calculated with expenditure approach formula. If Net exports are decreasing, so will aggregate demand.400
What is the formula to find real exchange rate? Use U.S. dollar per Mexican Peso for your example
400
What does it mean when a country devalues its currency? What is the expected outcome? (why did they devalue it)
devalue reduces the value of the currency in order to make exports cheaper (increase exports)
400
What are some reasons why countries are reluctant to trade? (there are 4 reasons, you have to list 1)
1. Desire to be self-reliant
2. high transportation costs
3. avoiding dependence on others for strategic reasons
4. matter of national pride or culture
400
What happens to demand for domestic currency, supply of domestic currency, and exchange rate?
Decrease demand for domestic currency
increase supply of domestic currency
decrease exchange rate