Other things the same, if the exchange rate changes from .40 AED per dollar to .
ID: 1122813 • Letter: O
Question
Other things the same, if the exchange rate changes from .40 AED per dollar to .45 AED per dollar, then the dollar has
Depreciated and so buys fewer UAE goods.
Appreciated and so buys more UAE goods.
Appreciated and so buys fewer UAE goods.
Depreciated and so buys more UAE goods.
Other things the same, if a country saves less, then
Net capital outflow rises, so net exports rise.
Net capital outflow rises, so net exports fall.
Net capital outflow falls, so net exports fall.
Net capital outflow falls, so net exports rise.
If the U.A.E were to impose import quotas
The demand for loanable funds would increase, but the demand for dirhams in the market for foreign-currency exchange would not.
Neither the demand for loanable funds nor the demand for dirhams in the market for foreign-currency exchange would increase.
The demand for dirhams in the market for foreign-currency exchange would increase, but the demand for loanable funds would not.
The demand for loanable funds and the demand for dirhams in the market for foreign currency exchange would both increase.
An increase in the KSA real interest rate induces
Saudis to buy more foreign assets, which reduces KSA net capital outflow.
Foreigners to buy more KSA assets, which increases KSA net capital outflow.
Foreigners to buy more KSA assets, which reduces KSA net capital outflow.
Saudis to buy more foreign assets, which increases KSA net capital outflow.
An increase in the budget deficit
Reduces net capital outflow and domestic investment.
Reduces net capital outflow and raises domestic investment.
Raises net capital outflow and reduces domestic investment.
Raises net capital outflow and domestic investment
If a country’s budget deficit increases, then in the foreign exchange market,
The supply of its currency shifts left, so the exchange rate rises.
The demand for its currency shifts left, so the exchange rate falls.
The demand for its currency shifts right, so the exchange rate rises.
The supply of its currency shifts right, so the exchange rate falls.
If purchasing power parity holds, a bushel of rice costs $10 in the U.S., and the nominal exchange rate is 0.5 Thai bhat per dollar, what is the price of rice in Thailand?
20 bhat
2 bhat
5 bhat
10 bhat
QUESTION 7
In the United States, a three-pound can of coffee costs about $10. If the exchange rate is about 1.2 euros per dollar and a three-pound can of coffee in Belgium costs about 16 euros. What is the real exchange rate?
4/5 cans of Belgian coffee per can of U.S. coffee
4/3 cans of Belgian coffee per can of U.S. coffee
3/4 cans of Belgian coffee per can of U.S. coffee
5/4 cans of Belgian coffee per can of U.S. coffee
Net capital outflow is defined as the purchase of
Foreign assets by domestic residents minus the purchase of domestic assets by foreign residents.
Foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents.
Domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.
Domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents.
Depreciated and so buys fewer UAE goods.
Appreciated and so buys more UAE goods.
Appreciated and so buys fewer UAE goods.
Depreciated and so buys more UAE goods.
Explanation / Answer
1. Answer: Appreciated and so buys more UAE goods.
Explanation: When the exchange rate changes from 0.40 AED per dollar to 0.45 AED per dollar, it means the purchasing power of 1 dollar has increased. This is because 1 dollar can now buy 0.45 AED instead of 0.40 AED. So, the dollar has appreciated. When dollar appreciates, its purchasing power goes high and it can buy more UAE goods than before.
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