B) more expensive; decrease C) less expensive; decrease D) more expensive; incre
ID: 1106505 • Letter: B
Question
B) more expensive; decrease C) less expensive; decrease D) more expensive; increase 2.50 2.00 1.50 1.00 0.50 o o.8 0.9 1.0 1.1 1.2 1.3 Quantity (trillions of U.S. dollars per day) n the figure above, an increase in the U.S. interest rate relative to that in Canada shifts the demand curve for U.S. dollars and shifts the supply curve of U.S. dollars A) rightward; leftward. B) rightward; rightward. C) leftward; rightward D) leftward; leftward 40) If the United States sells beef to Japan, the U.S. beef producer is paid with A) dollars. B) yen, the Japanese currency C) international monetary credits. D) euros, or any other third currency 41) When the U.S. exchange rate rises, foreign goods become and U.S. imports A) less expensive; increase B) more expensive; decrease C) less expensive; decrease D) more expensive; increase 42) The idea that the value of money is equal across countries is known as A) exchange rate parity B) purchasing power parity. C) the expected profit parity effect. D) interest rate parity.Explanation / Answer
Ans:
39) Option B
rightward,rightward
If the interest rate is higher it will attract foreign capital and this will cause the exchange rate to rise.Hence the demand curve for dollar shifts to rights and a higher interest rate increases the supply due to increased savings and the supply curve will shifts to right.
40) Option A
Dollars
In case of imports the amount need to be repaid in the currency of the country from which it is imported. In this case United States exporters receive in dollars.
41) Option A
Less expensive; increases
When the U.S. dollar is strong which means U.S. exchange rate rises, as compared other countries currencies, imports will become less expensive. This will increase foreign goods imports.
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