Question

If nominal interest rates in the U.S. rise, then the U.S. dollar will appreciate. Is this statement true, false, or uncertain? You will be graded solely on your explanation.

Answer #1

**"If nominal interest rates in the U.S rise ,
then the U.S doller will appreciate "--**- the statement is
uncertain . U.S doller will be appreciate if the real interest rate
increase . Real interest rate = nominal interest rate minus
inflation rate . If nominal interest rate of U.S rise but inflation
rate also rise same rate , then U.S doller will not appreciate
because real interest rate will be zero . But if nominal interest
rate increase in U.S but inflation rate is less than nominal
interest rate then real interest rate increase which will result
appreciation of doller . When real interest rate increase , hot
money inflow to the U.S to take the advantage of higher interest
rate , it increase the demand for doller which result the
appreciation of U.S doller .

Contractionary monetary policy would ______ interest rates and
_______ the U.S. dollar, leading to a(an) ________ in U.S. net
exports
increase, appreciate, decrease
decrease, appreciate, increase
increase, depreciate, decrease
decrease, depreciate, increase

Suppose interest rates rise in the United States, but they don’t
rise in other nations. As a result of this change, which of the
following is true?
I. The demand for the U.S. dollar will increase
II. The demand for the U.S. dollar will decrease
III. U.S. exports will decrease as a result of the changing value
of the U.S. dollar.
IV. U.S. exports will increase as a result of the changing value of
the U.S. dollar.
CHOOSE ONE
a....

The Fed will meet next week to decide the interest rate on the
U.S. dollar. The current interest rate is 0.25%. The market’s
consensus is that the Fed will leave the rate unchanged in the
coming meeting. According to the asset pricing approach, the U.S.
dollar will appreciate if the Fed raises the interest rate to
0.5%.
Select one:
True
False

The Fed will meet next week to decide the interest rate on the
U.S. dollar. The current interest rate is 0.25%. The market’s
consensus is that the Fed will leave the rate unchanged in the
coming meeting. According to the asset pricing approach, the U.S.
dollar will appreciate if the Fed raises the interest rate to
0.5%.
Select one: True False

Inflation, nominal interest rates, and real rates. From 1991
to 2000, the U.S. economy had an annual inflation rate of around
2.17%. The historical annual nominal risk-free rate for this same
period was around 4.96%. Using the approximate nominal interest
rate equation and the true nominal interest rate equation, compute
the real interest rate for that decade.
What is the estimated real interest rate using the approximate
nominal interest rate equation for that decade?
________(Round to two decimal places.)
What...

If the rate of U.S. Treasury notes were to rise
suddenly, the dollar would likely?
A. Depreciate
B. Appreciate
C. Not change

Interest rates on the U.S. dollar are 6.5% and euro rates are
5.5%. The dollar per euro spot rate is .950. What is the arbitrage
profit on a required 1 million euro payment if the forward rate is
.980 dollars per euro and the exchange occurs in one year?

If the nominal exchange rate was one U.S. dollar for 115
Japanese yen and then changed to one dollar for 112 Japanese yen,
we could accurately state that the dollar depreciated in relation
to the yen and the yen appreciated in relation to the dollar.
True or False?

QUESTION 52
A decrease in U.S. interest rates leads to
a.
a depreciation of the dollar that leads to smaller net
exports.
b.
a depreciation of the dollar that leads to greater net
exports.
c.
an appreciation of the dollar that leads to greater net
exports.
d.
an appreciation of the dollar that leads to smaller net
exports.
1 points
QUESTION 53
As the price level falls,
a.
the exchange rate rises, so net exports fall.
b.
the exchange...

Suppose that your company believes the Swiss franc will
appreciate versus the U.S. dollar in the coming three-month period.
Your company has $500,000 to invest. The current spot rate is
$0.9820/SF, the three-month forward rate is $0.9640/SF, and you
expect the spot rates to reach $1.0250/SF in three months. What
will be your company’s profit / loss if you buy Swiss franc and
keep for 3 months?
A. USD 12,500
B. CHF12,500
C. Unknown today
D. USD 21,800
E. None...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 8 minutes ago

asked 12 minutes ago

asked 14 minutes ago

asked 15 minutes ago

asked 37 minutes ago

asked 39 minutes ago

asked 46 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago