A negative value for the line item "Changes in official international reserves" in the balance of payments statement indicates thatA. the Bank of Canada issued foreign exchange.B. the Bank of Canada used foreign exchange to buy Canadian dollars on the foreign exchange markets.C. the Bank of Canada increased its reserves of foreign exchange.D. the Bank of Canada sold off some of the gold that it uses to back the Canadian dollar.

The objective of the question is to understand what a negative value for the line item 'Changes in…

Answered: A negative value for the line item…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter34: International Finance

Section34.2: Flexible Exchange Rates

Problem 1ST

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A negative value for the line item "Changes in official international reserves" in the balance of payments statement indicates that A. the Bank of Canada issued foreign exchange. B. the Bank of Canada used foreign exchange to buy Canadian dollars on the foreign exchange markets. C. the Bank of Canada increased its reserves of foreign exchange. D. the Bank of Canada sold off some of the gold that it uses to back the Canadian dollar.
If there is a decrease in the desire of Americans to purchase goods and services from other countries and put money in foreign banks and businesses then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would increase and the US dollar would appreciate. B. The equilibrium quantity of foreign currency would decrease and the US dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the US dollar would depreciate.
If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.
You own a local company. In the past year, you successfully expanded your sales market into Europe, and you now have profits and cash denominated in euros. You want to convert the euros to your home country currency to repatriate the profits and pay taxes. You are a. not required to convert the euros to the home currency to pay taxes. b. a demander of the euro in the foreign exchange market. c. a supplier of your home country's currency in the foreign exchange market. d. a demander of your home country's currency in the foreign exchange market.
Sarah Shetty in Milan. Sarah Shetty lives in Milan, Italy. She can buy a U.S. dollar for EUR0.9067. Alex North, living in Chicago, can buy a euro for USD1.1236. What is the foreign exchange rate between the dollar and the euro? a. The foreign exchange rate between the dollar and the euro in Milan is $ __/€. b. The foreign exchange rate between the euro and the dollar in Chicago is $ __/€.
The value of the Russian Ruble changed from 94 to the dollar to 91 to the dollar. What is the likely effect of this change in the foreign exchange market? A. It will make Russia's imports cheaper but may harm its export competitiveness. B. It will boost Russia's exports, making them more competitive. I c. It will have no impact on trade, as exchange rates do not influence international commerce. D. It will encourage capital outflows and discourage foreign investment.
1. The principal function of the foreign exchange market is the transfer of funds, thus purchasing power, from one nation and currency to another. 2. If it takes 116.57 yen to buy one dollar, it takes $.0085785 to buy one yen. 3. Purchasing-power parity theory postulates that the change in the exchange rate between two currencies is proportional to the change in the ratio in the two countries' general price levels. 4. The price-specie-flow adjustment mechanism operates by the deficit nation losing gold and experiencing a reduction in its money supply. 5. Monetary policy is very effective under a fixed exchange rate policy. True or Falae
Under a flexible exchange rate system, an increase in the value of the U.S. dollar in terms of other currencies is referred to as a. a depreciation of the U.S. dollar. b. an appreciation of the U.S. dollar. c. a monetizing of the U.S. dollar. d. a devaluation of the U.S. dollar.
Who would demand U.S. dollars in the foreign exchange market? U.S. firms and households wishing to purchase foreign goods and services Foreigners wishing to purchase U.S goods and services U.S. households wishing to purchase U.S. goods and services
The graph shows the demand curve for U.S. dollars. Draw a new demand curve that shows the effect of an increase in the world demand for U.S. exports. Label it. A change in the expected future exchange rate changes the demand for U.S. dollars and a change in the world demand for U.S. exports changes the demand for U.S. dollars A. today; in the future B. in the future; today C. in the future; in the future D. today; today 160 140- 120- 100- 80- 60- 40+ Exchange rate (yen per U.S. dollar) Do 1.3 1.5 1.6 1.7 1.4 Quantity (trillions of U.S. dollars per day) >>> Draw only the objects specified in the question. 1.8
In the foreign exchange market, how does a change in expected future U.S. exchange rate affect the demand for dollars?
estion 18 Other things the same, if the dollar appreciates relative to the Japanese yen, then A. the exchange rate falls. It will cost fewer yen to travel in the U.S. B. the exchange rate falls. It will cost more yen to travel in the U.S. C. the exchange rate rises. It will cost fewer yen to travel in the U.S. D. the exchange rate rises. It will cost more yen to travel in the U.S.

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