Question

Explain the probable result of the following events on the currency exchange rates below (assume all...

Explain the probable result of the following events on the currency exchange rates below (assume all other factors stay constant).

A popular movie released in the United States, but set in Spain significantly increases the number of U.S. tourists visiting Spain.

    The euro will   (Click to select)   stay constant   appreciate   depreciate  relative to the U.S. dollar.

The Federal Reserve undertakes expansionary monetary policy by cutting interest rates.

    The U.S. dollar will   (Click to select)   stay constant   depreciate   appreciate  relative to other foreign currencies.

A destructive typhoon in the Philippines increases the demand for U.S. lumber to help rebuild the country.

    The U.S. dollar will   (Click to select)   appreciate   stay constant   depreciate  relative to Philippine peso.

Disputed election results in Thailand increase the threat of political instability.

    The Thai baht will   (Click to select)   appreciate   stay constant   depreciate  relative to U.S. dollar.

There is a new discovery of massive mineral deposits in Russia

    The Russian ruble will    (Click to select)   depreciate   appreciate   stay constant  relative to other currencies.

The Mexican government decides to repay its debts by printing large sums of currency.

    The U.S. dollar will   (Click to select)   appreciate   depreciate   stay constant  relative to the Mexican peso.

Homework Answers

Answer #1

1. A popular movie released in the United States, but set in Spain significantly increases the number of U.S. tourists visiting Spain.

    The euro will appreciate, as tourists will demand more euro.

2.  The Federal Reserve undertakes expansionary monetary policy by cutting interest rates.

The U.S. dollar will depreciate. Lower interest rates tend to be unattractive for foreign investment and decrease the currency's relative value to other currencies.

3.

A destructive typhoon in the Philippines increases the demand for U.S. lumber to help rebuild the country.

    The U.S. dollar will appreciate as demand for U.S. dollars will increase.

4.

Disputed election results in Thailand increase the threat of political instability.

    The Thai baht will depreciate.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
# exchange rate 1. Suppose the Federal Reserve Board unexpectedly decreases interest rates in the United...
# exchange rate 1. Suppose the Federal Reserve Board unexpectedly decreases interest rates in the United States. How will this action affect the value of the dollar in the international dollar market?(Will the dollar appreciate, depreciate or stay the same?) Graphically show the impact on the international dollar market. Label all curves and axis. 2) Rate Spot. 0.7570 1 month 0.7574 3 months. 0.7570 6 months. 0.7569 1 Year 0.7674 2 years. 0.7611 3 years. 0.7668 4 years. 0.7730 The...
Foreign Exchange Markets Multiple-Choice: 1. The theory of purchasing-power parity indicates that if the price level...
Foreign Exchange Markets Multiple-Choice: 1. The theory of purchasing-power parity indicates that if the price level in the United States rises by 5% while the price level in Mexico rises by 6%, then a. the dollar appreciates by 1% relative to the peso. b. the dollar depreciates by 1% relative to the peso. c. the exchange rate between the dollar and the peso remains unchanged. d. the dollar appreciates by 5% relative to the peso. e. the dollar depreciates by...
Suppose that the following two events take place in the market for China’s currency, the yuan:...
Suppose that the following two events take place in the market for China’s currency, the yuan: U.S. parents are more willing than before to buy action figures and other Chinese toy exports, and China’s government tightens restrictions on the amount of U.S. dollar- denominated financial assets that Chinese residents may legally purchase. What happens to the dollar price of the yuan? Does the yuan appreciate or depreciate relative to the dollar?
1a. The nominal exchange rate between the United States dollar and the Japanese yen is which...
1a. The nominal exchange rate between the United States dollar and the Japanese yen is which of the following? -The reciprocal of the real exchange rate -The rate at which one of the currencies can be converted into the other currency -Always equal to the real effective exchange rate except when nominal interest rates within the two countries diverge -Always equal to the real effective exchange rate except when real interest rates within the two countries diverge b. If German...
Which of the following statements are true? There are several, select all that are correct. Consider...
Which of the following statements are true? There are several, select all that are correct. Consider each statement on its own separate from the others listed. Question 12 options: Two reasons why financial management of a multinational company differs from that of purely domestic firms are: (1) different economic systems and (2) political risk In a monetary system with floating exchange rates, the exchange rate between two countries is determined by the relative supply and demand for their currencies Exchange...
Which of the following is not accurate regarding foreign exchange markets? Select one: a. All of...
Which of the following is not accurate regarding foreign exchange markets? Select one: a. All of the answers are accurate b. spot foreign exchange transactions involve the immediate exchange of currencies at current exchange rates c. forward foreign exchange transactions involve the exchange of currencies at a specified exchange rate at a specific date in the future d. Foreign exchange risk is the risk that cash flows will vary as the actual amount of U.S. dollars received on a foreign...
TRUE FALSE. If false CORRECT the wrong word/words An increase in the nominal exchange rate ($...
TRUE FALSE. If false CORRECT the wrong word/words An increase in the nominal exchange rate ($ per Euro) will make the dollar less expensive to foreigners If iD= 10% and iF = 5%, for investors to be indifferent between holding both one year financial assets, they should expect expect that over the next year the domestic currency will appreciate. A trade deficit implies that that country will require a surplus in the financial account compensating that deficit. An increase in...
1. Exchange rates are equalized in different locations due to: a. arbitrage. b. government intervention in...
1. Exchange rates are equalized in different locations due to: a. arbitrage. b. government intervention in foreign exchange markets. c. free trade in goods and services. d. the actions of importers and exporters. 2. How can one profit through arbitrage if the dollar per euro exchange rate in London is $2 per pound while in New York is $1.95 per pound? a. Buy dollars in New York and sell them in London b. Buy pounds in London and sell them...
An MNC's value depends on all of the following: a. the MNC's required rate of return....
An MNC's value depends on all of the following: a. the MNC's required rate of return. b. the amount of the MNC's cash flows in a particular currency. c. the exchange rate at which cash flows are converted to dollars. d. All of the above 1 points    QUESTION 2 Livingston Co. has a subsidiary in Korea. The subsidiary reinvests half of its net cash flows into operations and remits half to the parent. Livingston's expected cash flows from domestic...
In the early 1980s, the Federal Reserve pursued a tight monetary policy. All else being equal,...
In the early 1980s, the Federal Reserve pursued a tight monetary policy. All else being equal, the impact of that policy was to __________ interest rates in the United States relative to those in Europe and cause the dollar to __________ against European currencies. Select one: a. increase; appreciate b. decrease; depreciate c. increase; depreciate d. decrease; appreciate Based on the supply and demand model of the exchange rate, which of the following should cause the Indian Rupee to appreciate?...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT