Chapter 15--MacroTB

# Chapter 15--MacroTB - CHAPTER 15 Exchange Rates and...

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MULTIPLE-CHOICE 1. France, Italy, Germany, the United King dom, and Spain all use the same currency, called the a. euro. b. dollar. c. pound. d. franc. e. They do not all use the same currency. Answer: e. Section: 15.2 2. Which of the following countries use the euro? a. Greece b. Italy c. Portugal d. Sweden e. All of the above. Answer: e. Section: 15.2 3. The rate at which one currency is exchanged for another is called a. the interest rate. b. the real exchange rate. c. purchasing power parity. d. the nominal exchange rate. e. the forward exchange rate. Answer: d. Section: 15.2 4. Consider Table 15.1. The numbers represent a. the interest rate. b. the real exchange rate c. purchasing power parity. d. the nominal exchange rate e. the forward exchange rate. Answer: d. Section: 15.2 156 Exchange Rates and International Finance CHAPTER 15 Table 15.1: Currencies (July 2007) Currency \$US ¥Japan Euro \$Canada £UK \$Australia Swiss Franc \$US 1.000 118.795 0.734 1.064 0.493 1.175 1.208 ¥Japan 0.008 1.000 0.006 0.009 0.004 0.010 0.010 Euro 1.363 161.947 1.000 1.451 0.673 0.673 1.647 \$Canada 0.940 111.618 0.689 1.000 0.464 1.104 1.135 £UK 2.027 240.756 1.487 2.157 1.000 2.381 2.448 \$Australia 0.851 101.112 0.624 0.906 0.420 1.000 1.028 Swiss Franc 0.828 98.352 0.607 0.881 0.409 0.973 1.000

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Exchange Rates and International Finance | 157 5. Consider Table 15.1. According to the table, \$1US buys a. 0.734. b. £0.493. c. Swiss Franc 0.828. d. 1.363. e. a–c. Answer: e. Section: 15.2 6. Consider Table 15.1. According to the table, 1 buys a. \$US1.363. b. ¥161.947. c. ¥0.006. d. SFr0.607. e. a and b. Answer: a. Section: 15.2 7. Consider Table 15.1. The dollar has a. appreciated against the euro. b. depreciated against the euro. c. appreciated against the Canadian dollar. d. depreciated against the Japanese yen. e. Not enough information is given. Answer: e. Section: 15.2 8. Consider Table 15.1. The euro has a. appreciated against the U.S. dollar. b. depreciated against the Swiss franc. c. appreciated against the Canadian dollar. d. depreciated against the Japanese yen. e. Not enough information is given. Answer: e. Section: 15.2 9. Consider Figure 15.1, which shows the £UK/\$US, \$US/ , and £UK/ exchange rates. During the period 1999–2001, the U.S. dollar __________ relative to the euro and __________ relative to the U.K. pound. a. appreciated; appreciated b. appreciated; depreciated c. depreciated; depreciated d. depreciated; appreciated e. Not enough information is given. Answer: a. Section: 15.2 Figure 15.1: Exchange Rates 2.50 2.00 1.50 1.00 0.50 0.00 EXCHANGE RATE YEAR Pounds/euro \$/euro \$/pound 1999.01 1999.06 1999.11 2000.04 2000.09 2001.02 2001.07 2001.12 2002.05 2002.10 2003.03 2003.08 2004.01 2004.06 2004.11 2005.04 2005.09 2006.02 2006.07 2006.12 2007.05
158 | Chapter 15 10. Consider Figure 15.1, which shows the £UK/\$US, \$US/ , and £UK/ exchange rates. During the period 2001–2007, the U.S. dollar __________ relative to the euro and __________ relative to the U.K. pound. a. appreciated; appreciated b. depreciated; remained somewhat unchanged c. appreciated; remained somewhat unchanged d. depreciated; appreciated e. Not enough information is given. Answer: b. Section: 15.2 11. Consider Figure 15.1, which shows the £UK/\$US, \$US/ , and £UK/ exchange rates. In the period 1999–2001, the euro __________ relative to the U.K. pound and __________ relative to the U.K. pound after 2001.

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## This note was uploaded on 01/20/2011 for the course ACCT ACCT 3371 taught by Professor Smart during the Spring '10 term at Rensselaer Polytechnic Institute.

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Chapter 15--MacroTB - CHAPTER 15 Exchange Rates and...

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