1. If $.80 U.S. = $1.00 Canadian, then: A.A U.S. nickel is worth four Canadian c

Question

1. If $.80 U.S. = $1.00 Canadian, then:     
A.A U.S. nickel is worth four Canadian cents.
B.A U.S. quarter is worth 40 Canadian cents.
C.40 Canadian cents are worth 50 U.S. cents.
D.Four U.S. cents are worth 5 Canadian cents.
E.$1.15 U.S. = $1.35 Canadian.

Is the answer E?

2.In recent years, the U.S. current account has been ____ and the U.S. capital account has been ____.     
A.Negative; negative.
B.Negative; positive.
C.Positive; negative.
D.Positive; positive.

Is the answer A or B?

3.Consider the market for the U.S. dollar where the price of the dollar is expressed in terms of yen. If the demand for the U.S. dollar rises, then which of the following is true in the market for yen?     
A. The demand for yen rises.
B. The demand for yen falls.
C. The supply of yen rises.
D. The supply of yen falls.

Is it C?

4.Suppose Chinese consumers suddenly wish to travel to the U.S. As a result of this change in travel plans:     
A.The demand for yuan (the Chinese currency) will rise.
B.The demand for yuan will fall.
C.The supply of yuan will rise.
D.The supply of yuan will fall.

Is it D?

5. Now suppose the exchange rate changes so that the U.S. dollar = 120 yen. Under this new exchange rate, what is the dollar price of the Toyota Camry (with the 4 million yen price tag)? (Use whole numbers in your answer.)

Explanation / Answer

1) D.Four U.S. cents are worth 5 Canadian cents.
2) B.Negative; positive.
3) C. The supply of yen rises.
4) D.The supply of yuan will fall.
5) 4 million /120 = 4000000/120 = 33333 dollars

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