The foreign exchange market is the market where a

166. The foreign exchange market is the market where
a. goods and services of different countries are exchanged.
b. currencies of different countries are exchanged.
c. transportation services for foreign goods are contracted.
d. either a or c
e. none of the above
ANS: B DIF: Moderate
167. If the income of U.S. citizens falls relative to the income of Japanese citizens, the dollar will
__________ in terms of the yen, and the yen will __________ in terms of the dollar.
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DIF: Moderate
168. If inflation in the United States is higher than it is in Mexico, the dollar will __________ in terms of
the peso and the peso will __________ in terms of the dollar.
DIF: Moderate
169. If real interest rates are significantly lower in Japan than in the United States, the yen will likely
__________ in terms of the dollar and the dollar will likely __________ in terms of the yen.
DIF: Moderate
170. If the U.S. dollar appreciates in the foreign exchange market, U.S. exports will be __________ and
U.S. imports will be __________.
a. relatively less expensive; relatively less expensive
b. relatively less expensive; relatively more expensive
c. relatively more expensive; relatively less expensive
d. relatively more expensive; relatively more expensive
e. unaffected; relatively less expensive
ANS: C DIF: Moderate
171. If the U.S. dollar depreciates in the foreign exchange market, U.S. exports will be __________ and
U.S. imports will be __________.
DIF: Moderate
172. The market in which the currencies of different countries are exchanged is called the
DIF: Easy
173. Under the gold standard, exchange rates were determined by
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e. none of the above
ANS: A DIF: Moderate