Chapter 9 SGQ

Chapter 9 SGQ - Chapter Nine International Monetary and...

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Chapter Nine: International Monetary and Financial Environments These are your study-guide questions for chapter nine. 1. In a free market, the “price” of any currency (rate of exchange) is determined by supply and demand. Answer the following generalities by filling in the blanks and be able to identify these relationships in quiz and exam questions: ◘ The greater the supply of a currency, the __________ its price ◘ The lower the supply of a currency, the ___________ its price ◘ The greater the demand for a currency, the __________ its price ◘ The lower the demand for a currency, the __________ its price 2. Define currency appreciation. Also, answer this question and be ready for questions like it on the exam/quiz: Euro appreciation and US demand for BMWs: If the euro/dollar exchange rate goes from one euro equals $1.25 to a new rate of one euro equals $1.50 → due to increased demand for Euros or decreased supply of Euros, the euro becomes expensive to U.S. customers, and fewer BMWs will be sold.
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Chapter 9 SGQ - Chapter Nine International Monetary and...

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