1. If the pound price of the yen falls (YEN/POUND), a. the yen cost of British g
ID: 1225963 • Letter: 1
Question
1. If the pound price of the yen falls (YEN/POUND),
a. the yen cost of British goods and services purchased in Japan will rise.
b. the yen cost of British goods and services purchased in Japan will fall.
c. the pound cost of Japanese goods and services purchased in Britain will fall.
d. both a and c
e. both b and c
2. Which of the following circumstances could cause EURO/USD to fall?
a. Currency speculators believe the dollar is undervalued in terms of the euro.
b. US demand for European goods and services spikes up as the recession ends in the US.
c. Demand in Europe for goods and services manufactured in China drops sharply as recession takes hold in Europe.
d. all of the above
Key Currency Cross Rates 9:58 a.m. EDT 09/11/12 YEN DOLLAR 0.97200 77.825 13.012 0.94050 0.62321 0.77900 EURO POUND 1.2478 99.904 16.704 1.2073 SFRANC PESO CDNDLR 1.5597 124.88 20.879 1.5091 Canada Japan Mexico Switzerland U.K. Euro U.S Source: ICAP plc 1.0335 0.07470 82.749 13.835 0.01249 5.9810 0.07228 0.04789 0.05987 0.07685 80.067 13.387 0.96759 0.64116 0.80144 1.0288 See Closing Cross Rates 0.16720 0.01208 0.00801 0.01001 0.01285 0.66264 0.82828 1.0633 0.80001 1.2500 1.2837 1.6046Explanation / Answer
Ans:
1) d. both a and c
a. the yen cost of British goods and services purchased in Japan will rise.
c. the pound cost of Japanese goods and services purchased in Britain will fall.
This causes exports to be less expensive and imports to be more costly. In principle, it can increment financial development, however it might bring about swelling.
2)
a. Currency speculators believe the dollar is undervalued in terms of the euro.
This causes exports to be less expensive and imports to be more costly. In principle, it can increment financial development, however it might bring about expansion.
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