The assets market approach is most helpful in explaining ?

A. Why exchange rates remain quite stable
B. Why governments change their money supplies
C. Long term exchange rate movements
D. Short term exchange rate movements

If a Big Mac hamburger sells for the same dollar value in New York as in London then ?

A. The inflation rate in each country will necessarily equal zero
B. The inflation rate in each country will necessarily equal 1 percent
C. The exchange rates are said to be fixed pegged to each other
D. Purchasing power parity holds

Relatively high real interest rates in the United States tend to ?

A. Decrease the foreign demand for dollars causing the dollar to depreciate
B. Decrease the foreign demand for dollars causing the dollar to appreciate
C. Increase the foreign demand for dollars causing the dollar to depreciate
D. Increase the foreign demand for dollars causing the dollar to appreciate

In the presences of purchasing power parity, if one-dollar exchanges for 2 British pounds and if a DVD player costs $400 in the United States then in Britain the DVD player should cost ?

A. 200 pounds
B. 400 pounds
C. 600 pounds
D. 800 pounds

A primary reason that explains the appreciation in the value of U.S dollar would be ?

A. Large trade surpluses for the united states
B. High inflation rates in the united states
C. Lack of investor confidence in u.s money policy
D. High interest rates in the united states

When the price of foreign currency (i.e the exchange rate) is below the equilibrium level ?

A. An excess demand for that currency exists in the foreign exchange market
B. An excess supply of the currency exists in the foreign exchange market
C. The demand for foreign exchange shifts outward to the right
D. The demand for foreign exchange shifts backward to the left

The appreciation in the value of the dollar in the early 1980s is explained by all of the following except ?

A. The united states being considered a safe haven by foreign investors
B. Relatively high real interest rates in the united states
C. Confidence of foreign investors in the u.s economy
D. Relatively high inflation rates in the united states

If Canada runs a balance of payments surplus and exchange rates are floating ?

A. The value of other currencies will rise relative to the dollar
B. The dollar will depreciate relative to other currencies
C. The price of foreign goods will become cheaper to canadians
D. The price of foreign goods will rise for canadians

The exchange value of the U.S dollar is primarily determined by ?

A. The rate of inflation in the united states
B. The number of dollars printed by the u.s government
C. The international demand and supply for dollars
D. The monetary value of gold held at fort knox, kentucky

For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent the above variables would cause investment funds to flow from ?

A. The united states to switzerland causing the dollar to depreciate
B. The united states to switzerland causing the dollar to appreciate
C. Switzerland to the united states causing the franc to depreciate
D. Switzerland to the united states causing the franc to appreciate