Every time a foreign company sells products in America O the demand for dollars

Question

Every time a foreign company sells products in America O the demand for dollars in the foreign exchange market rises. ? the supply of dollars in the foreign exchange market rises. ?the demand for dollars in the foreign exchange market falls. O the supply of dollars in the foreign exchange market falls. QUESTION 2 Which of the following would occur in the foreign exchange market if foreign consumers want to buy more American products? O The demand for US dollars will fall O The supply of foreign currency will fall. O The dollar will appreciate. O The dollar will depreciate. QUESTION 3 A British pound cost S1.56 in U.S. dollars in 1996, but $1.66 in U.S. dollars in 1998. Over these two years 0 the dollar appreciated relative to the pound. O the pound depreciated relative to the dollar 0 the pound appreciated relative to the dollar the exchange rate between the pound and dollar did not change QUESTION 4 If a German car cost 20,000 Euro and the dollar-Euro exchange rate is 1.25 dollars per Euro, what is the cost of the car in dollars? $25,000 C) S16.000 $20,000 S12,500

Explanation / Answer

Q1. Option 2
With the increase in imports, the dollar depreciates and there would be more supply in the foreign exchange market.

Q2. Option 3
With the increase in demand for US goods, the demand for dollar increases which appreciates the value of dollar

Q3. Option 3, as more of US dollar needs to be spent against pound

Q4. Option 1
1.25*20000 =$25000

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