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CHAP010 - Chapter 10 Foreign Exchange Multiple Choice...

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Chapter 10 Foreign Exchange Multiple Choice Questions 1. From October 1997 to January 1998, the economy of South Korea was in turmoil. One of the problems was: A) The currency of South Korea appreciated considerably making it very difficult for Korean exporters to sell good abroad. B) The value of the U.S. $ compared to the Korean won fell by more than half. C) U.S. good became very cheap to Koreans making it difficult for Korean manufacturers to compete with imports. D) The value of the won fell by more than half compared to the U.S. $, making U.S. goods very expensive to Koreans and Korean goods relative inexpensive for U.S. residents. Answer: D LOD: 1 Page: 228 A-Head: Foreign Exchange Basics. 2. An American traveling to Europe will find it easier to make purchases now because: 3. The nominal exchange rate: 264 Cecchetti: Money, Banking, and Financial Markets
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Chapter 10 Foreign Exchange 4. If an American traveling abroad can obtain 115 euros for $100 U.S the current euro per $ exchange rate is: 5. If in late 2003 one U.S. dollar exchanged for 118 euros and in mid-2004 one U.S. dollar exchanged for 127 euros, then: A) The euro appreciated relative to the dollar. B) The dollar appreciated relative to the euro. C) European good became more expensive to Americans. D) There is not enough information to answer the question. Answer: B LOD: 2 Page: 230 A-Head: Foreign Exchange Basics. 6. If the Japanese yen appreciates against the U.S. dollar:
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