Quiz III: International Economics

Monetary authority must intervene to determine the appropriate floating exchange-rate.

If the British pound suddenly sank from $1.80 to $1.60, British would buy more goods in U.S.

Americans demand less British pound when buying more from British producers.

Remittences can also result in demand or supply of foreign currency.

In the floating exchange rate, the spot price of a foreign currency is set by local consumers.

In the floating exchange rate, spot price of foreign currency is determined by demand & supply.

Balance of payments categories make the floating exchange rate rise or fall over time.

British demand more U.S. dollars when buying more from American producers.

Central banks set the free market equilibrium related to foreign exchange market.

Floating exchange-rate system operates without intervention by governments, central bankers.

If the British pound (BP) suddenly sank from $1.80 to $1.60, Americans would demand more BP.

Government intervention changes the free market equilibrium reached by foreign exchange market.

In a floating exchange rate the spot price is determined by market equilibrium of the currency.

In the floating exchange rate, the spot price of foreign currency is market-driven.

Floating exchange rate depends only on demand-side forces.

When a higher exchange rate drops the quantity demanded, the demand curve will slope downward.

If the British pound suddenly sank from $1.80 to $1.60, Americans would buy more goods in UK.

When a lower exchange rate raises the quantity demanded, the demand curve will slope downward.

If the British pound (BP) suddenly sank from $1.80 to $1.60, Americans will supply more BP.

If the British pound suddenly sank from $1.80 to $1.60, Americans would buy less goods in UK.

Forces of supply and demand make the floating exchange rate rise or fall over time.

The free market equilibrium of a foreign currency reflects the interaction of demand & supply.

International payments of income can result in demand or supply of foreign currency.